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

In Case 258/81

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

gives the following

JUDGMENT

Facts amd Issues

The facts of the case, the course of the procedure and the conclusions, submissions and arguments of the parties may be summarized as follows:

I — Summary of the facts

After arriving at the view in the third quarter of 1980 that the European iron and steel industry was for the purposes of Article 58 of the ĖCSC Treaty in a manifest crisis and after the indirect courses of action available to it had proved to be ineffective or insufficient to cope with the crisis, the Commission arrived at the conclusion that in order to restore balance between supply and demand it must intervene directly by means of binding measures relating to production. Consequendy, by Decision 2794/80/ECSC of 31 October 1980 (Official Journal 1980, L 291, p. 1) it established a system of steel production quotas for undertakings in the Community's iron and steel industry applicable until 30 June 1981.

Nevertheless demand for most steel products fell further and the slight increase in prices was insufficient in view of the financial burdens on undertakings. Towards the middle of 1981 it thus appeared that the European iron and steel industry was still in a period of manifest crisis and that the attainment of the objectives set out in Article 3 of the ECSC Treaty was seriously jeopardized.

By Decision 1831/81/ECSC of 24 June 1981 (Official Journal 1981, L 180, p. 1) the Commission therefore established for undertakings in the iron and steel industry a monitoring system and a new system of production quotas in respect of certain products.

That decision left open the question of the system to be applied to the light section category (wire-rod, concrete reinforcing bars and merchant bars) pending the outcome of talks which the Commission was to have with the producers of those products.

As regards wire rod, criteria for establishing a voluntary system of reducing production had been laid down by a number of producers accounting for a sufficiently high proportion of production of that product. On the other hand no basis could be evolved for the establishment of a voluntary system covering concrete reinforcing bars and merchant bars.

Since there was no improvement in market conditions and the level of orders and information concerning economic trends pointed on the contrary to a possible deterioration in the situation, the Commission considered it necessary to include concrete reinforcing bars and merchant bars in the compulsory system of production quotas.

Consequently it adapted Decision 1831/81 by its Decision 1832/81/ECSC of 3 July 1981 and included concrete reinforcing bars and merchant bars in the new system of production quotas established under Decision 1831/81 (Official Journal 1981, L 184, p. 1).

Article 5 of Decision 1831/81, as amended by Decision 1832/81, provides that the Commission is to fix each quarter for each undertaking its production quota and the part of such quotas which may be delivered in the Common Market on the basis of reference production and reference quantities and by the application of abatement rates to such production and quantities.

The rules for determining the reference production for Categories V and VI (concrete reinforcing bars and merchant bars) are set out in Article 7a inserted into Decision 1831/81 by Decision 1832/81.

According to that provision account is to be taken of the quotas allocated by the Commission during the period of application of Decision 2794/80. Those quotas are to be used to reconstitute the relevant reference production on the basis of the abatement rates in force during the three quarters in question. The corrective factors are to be the ratios between that reconstituted reference production and the quarterly reference production figures determined pursuant to Article 4 (1) of Decision 2794/80 (for each month of the relevant quarter reference is to be made to the same month during the period from July 1977 to June 1980 during which total production was the highest; the three months thus chosen, which will not necessarily be consecutive, are to constitute the reference period). The average of those corrective factors is to be applied to the refeence production calculated in accordance with Article 4(1) of Decision 2794/80 in respect of the third quarter of 1981 in order to arrive at the reference production figures corrected for that quarter. The sum total of the reconstituted reference production for the three quarters of the period of application of Decision 2794/80 and the reference production corrected for the third quarter of 1981 is to constitute the annual corrected reference production.

Article 8 of Decision 1831/81 provides that the reference quantities which are used to establish the proportion of the quotas which may be delivered on the Common Market by each undertaking are to be calculated by applying to its reference production the percentage of its deliveries on the Common Market compared with its total production during the period of the 12 best months.

Article 9(1) of Decision 1831/81 provides that the Commission is to fix each quarter the abatement rates for establishing the production quotas and the part of those quotas which may be delivered on the Common Market.

Commission Decision 1833/81/ECSC of 3 July 1981 (Official Journal 1981, L 184, p 6) fixed those abatement rates for Categories V and VI (concrete reinforcing bars and merchant bars) for the third quarter of 1981. The abatement rate was 30% for production quotas and 35% for the part of the quotas which could be delivered on the Common Market.

Article 9(2) of Decision 1831/81 provides that the Commission must notify to each undertaking its reference production and reference quantities as well as its production quotas and the pan of those quotas which may be delivered on the Common Market.

By a decision contained in a letter dated 12 August 1981 the Commission, acting pursuant to Articles 5 and 9 (2) of Decision 1831/81, notified to the undertaking Meiallurgiki Halyps AE, a limited liability company incorporated under the laws of Greece, having its registered office in Athens, its reference production and reference quantities for products in Categories V. and VI for the third quarter of 1981 as well as its production quotas and the part of those quotas which could be delivered on the Common Market.

The figures fixed were as follows:

The Commission's decision of 12 August 1981 was notified to Metallurgiki Halyps AE by post on 24 August 1981.

During the proceedings the decision of 12 August 1981 was amended by the Commission's decision of 5 January 1982 and then by its decision of 4 February 1982. Those decisions increased the company's production quota for products in Category V (concrete reinforcing bars) for the third quarter of 1981 from 45504 to 61123 and then to 74738 tonnes and the part of the quota which could be delivered on the Common Market from 18285 to 26450 and then to 30032 tonnes. The Commission's decisions of 5 January and 4 February 1982 are not at issue in this case.

II — Written procedur

On 22 September 1981 Metallurgiki Halyps AE brought an action for a declaration that the Commission's decision of 12 August 1981 was void.

The written procedure followed the normal course

Upon 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.

After the Court's judgment of 16 February 1982 in Joined Cases 39, 43, 85 and 88/81 Halyvourgiki Inc. and Helleniki Halyvourgia AE v Commission had been delivered, the applicant, in response to a request from the Court of 16 March 1982, said in a statement dated 5 April 1982 that it was withdrawing one of its submissions in its application.

By an order of 5 May 1982 the Court decided to assign the case to the Second Chamber pursuant to Article 95 (1) and (2) of the Rules of Procedure.

Following a question put to it by the Court the applicant stated in a telex message of 9 June 1982 that it was withdrawing another submission in its application.

III — Conclusions of the parties

The applicant claims that the Court should:

a) Declare the application admissible;

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

c) Order the Commission to pay the costs.

The Commission contends that the Court should:

a) Dismiss the application as unfounded;

b) Order the applicant to pay the costs.

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

Having withdrawn two of its submissions set out in its application the applicant primarily bases its action on objections of illegality to general Decision 1831/81 (as amended) pursuant to which the contested individual decision was adopted. The applicant alleges that Decision 1831/81 is in breach of the Act concerning the Conditions of Accession of the Hellenic Republic and the Adjustments to the Treaties, certain protocols thereto and general principles of law governing their application and, secondly, the ECSC Treaty and general principles of law governing its application.

The Commission considers that all of the applicant's submissions and arguments are unfounded.

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

The applicant contends that Decision 1831/81 fails to have regard to the spirit, objectives and wording of the transitional provisions contained in the Act concerning the accession of Greece and the Protocols annexed thereto as well as to the general principles of legal certainty, protection of legitimate expectation and the right to property.

a) It argues that the Act concerning the Conditions of Accession of the Hellenic Republic and the Adjustments to the Treaties, in particular Articles 25 to 34, 38, 116, 129(1) and 130 thereof as well as Protocol 3 thereto on the granting by the Hellenic Republic of exemption from customs duties on the importation of certain goods and Protocol 7 on the economic and industrial development of Greece, introduced transitional arrangements whose purpose was to harmonize and align the level of development of the Greek steel industry with that of the steel industry of the other Member States during a transitional period of five years. Those arrangements may not be amended or repealed by measures adopted by the Community institutions. But that is what happens when a specific measure adopted by the Community institutions is contrary to the purpose and spirit of the transitional arrangements provided for in the Act of Accession and the protocols thereto. The binding nature of recommendations and decisions, within the meaning of Article 14 of the ECSC Treaty, is subject to the fundamental condition and express reservation that they comply with the various rules contained in the Act of Accession. That condition is expressly laid down by Articles 2, 9 and 145 of the Act of Accession.

b) As regards the application of Article 58 of the ECSC Treaty during the transitional period, although the Act of Accession does not provide for any special derogations for the Greek steel industry, it would be contrary to the general spirit, aim and clear intention of the Contracting States, with regard to the structuring of the special transitional arrangements made for Greece to conclude from a strictly literal interpretation of Article 2 of the Act of Accession that it is lawful also during the transitional period to adopt pursuant to Article 58 rules of secondary law which are also binding on the Greek steel industry. In interpreting and applying the Treaties the Court must give particular consideration to the aims of the Community and use them as a basis of interpretation for finding the true meaning of the provisions in question. The Court prefers the teleologica! and the contextual method of interpretation to the literal method. In providing that the provisions of the original Treaties and the acts adopted by the institutions of the Communities are to apply in Greece “under the conditions laid down in those Treaties and in this Act”, Article 2 of the Act of Accession confirms that it is necessary to apply the teleologicai and contextual method of interpretation to determine the spirit and ratio legis of the transitional provisions. Contrary to the Commission's view, the provisions of the Act of Accession are, as regards their formal validity, in all respects equivalent to those of the Treaties establishing the Communities, and since together with those provisions they form a whole they must be interpreted and applied in an identical manner. There are no grounds for interpreting and applying some more strictly than others. It may even be argued that the provisions of the Act of Accession, introducing special rules to integrate a new State into the Community, are special provisions which for that reason take precedence over the general rules.

c) In view of the spirit of the transitional provisions of the Act of Accession and regard being had to the intention of the Contracting States it should be said that it was thought to be in the common interest to foster the development not only of the Greek economy in general but also, more specifically, of the Greek steel industry in order to enable it to reduce the considerable gap and catch up with the level of development of the Community steel industry within the limited time made available in the transitional period. In view of the spirit and aim of the transitional provisions the fundamental question arises whether it is possible for quotas to be introduced if this results in reducing the already insufficient production of Greek steel undertakings. The introduction of measures to reduce production not only retards industrial development but. also disrupts the operation of Greek steel undertakings causing particularly dire consequences which make the solemnly declared aims of the special transitional arrangements worthless. What can be the sense of declaring that it is necessary to protect and steadily improve and develop the Greek economy to bring living standards in Greece up to those of the other European States if the effect of reducing the already insufficient production of Greek steel undertakings is to bring their operation to a halt and drive them into insolvency? What is the point of protecting national production by means of customs barriers and the import deposit system if Decision 1831/81 might end or drastically curtail production which ought to be receiving maximum protection? What is the point of the provision in Protocol 7 on the elimination of underemployment if undertakings are forced to lay off staff because of reductions in production and because they are compelled to operate under totally uneconomic conditions? What is the point of progressively evening out regional differences in levels of development as declared in Protocol 7 if the regions of Greece in which the steel undertakings are located sink into depression? What is the point of the provision in Protocol 3 on the granting to Greece of the right to maintain the legislative measures to aid development if owing to the limit placed on production the applicant company benefiting from those measures must substantially reduce the level of production which it was entitled to attain? Protocol 7 requires all the Community institutions to use the means, procedures and Community resources available to them under all the Treaties, and not just the EEC Treaty, to assist the industrial development of Greece. The object of Protocol 3 maintaining in force national legislative measures concerning exemptions from customs duty is to continue the aid towards the steady development of the steel industry's production capacity, an aim which the imposition of production quotas on the Greek steel industry puts in jeopardy. At any rate, the Act of Accession nowhere stipulates that from the time of Greece's entry into the Community the “settled achievements of the Community” [“acquis communautaire”] must be applied to it automatically and without any exception. The Community decisions adopted pursuant to Article 58 of the ECSC Treaty must also be compatible with the special provisions laid down in the Act of Accession. No express provision to that effect is needed in that act.

d) The production limits imposed on Greek steel undertakings by Decision 1831/81 are contrary to the general principles of legal certainty, protection of legitimate expectation and the right to property. Protocol 3 to the Act of Accession authorizes and requires the applicant to produce each year a total of 520000 tonnes of finished products in performance of contracts made between July 1972 and December 1978 with the Greek State authorities which have applied to investments the arrangements introduced by Law No 4171/61 on general measures to aid the development of the country's economy. The lowering of the applicant's production by Decision 1831/81 to a figure less than that is in flagrant contradiction with the principle of legal certainty and also constitutes a serious breach of the principle of the protection of legitimate expectation as regards the conduct of the Community institutions. That lowering of production is also contrary to the right to property recognized by Protocol No 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms inasmuch as it compels the applicant to operate under uneconomic conditions which is bound to lead to insolvency and cause it to lose its assets without any fault on its part. The effect of the contested decision is to undermine the right, inherent in the right to property, to use, exploit and improve existing plant. Decision 1831/81 jeopardizes the supremacy of primary Community law. Protocol 3 and the relevant provisions of the Act of Accession are clearly intended to help to improve and develop the production capacity of Greek industry. The framework thus created for the development of Greek steel undertakings during the period of validity of the transitional arrangements may not be changed by recommendations and decisions of the Community institutions without prejudicing the principles of legal certainty and protection of legitimate expectation of individuals with respect to the primacy of Community law.

e) The Commission has itself subsequently recognized that it cannot be right to impose on the Greek steel industry during the transitional period cuts in production which by their nature put a stop to the industrialization of Greece and prevent all the major structural changes needed to integrate Greece into the Community. In its Decision 2804/81 of 23 September 1981, amending for the second time Decision 1831/81 (Official Journal 1981, L 278, p. 1) it stated that: In Greece, industry as a whole is still in process of development; this implies that major structural changes will follow. New industries are emerging and expanding. In such a situation, the steel industry can play a particularly important part in the industrialization of the country. However, the construction industry is a decisive element in steel consumption... Decision 2804/81 inserted into Decision 1831/81 a new article, 14a, permitting the Commission to grant special treatment to Greek undertakings to which the quota system causes exceptional difficulties likely to prevent them from adapting themselves to the structural developments in Greece's economy.

The Commission considers that the applicant's arguments are wholly without merit.

a) The Act of Accession made absolutely no exception as far as the application of Article 58 of the ECSC Treaty to Greek steel undertakings is concerned. In accordance with Article 2 of the Act of Accession, Article 58 therefore applies to them unconditionally and ab initio. The Act of Accession makes a derogation from the rules of the ECSC Treaty which, like any derogation, must be interpreted strictly. It is not possible, by invoking an imaginary spirit of the Act of Accession and interpreting it widely, to arrive at the conclusion that that spirit must prevail over the express provisions of the ECSC Treaty which are applicable without exception to Community undertakings. The fact that the Act of Accession contains certain transitional provisions providing in particular for the progressive abolition of customs barriers and of the deposit system does not mean that those exceptions must be extended to other fields, in particular to a production quota system established under Article 58. As far as methods of interpretation are concerned, it must be remembered that when the Court uses the teleological and contextual method of interpreting legal provisions in cases in which they are not clear it always does so on the basis of a specific provision in the field under consideration. In the present case the only provision in question is Article 58 of the ECSC Treaty and the Act of Accession makes no derogation from it. If the legal provision is clear, interpretation is not necessary. In no case can there be any question of entirely escaping the application of Article 58.

b) As regards the applicant's contentions about the purpose of the transitional protective arrangements applicable to Greece, it must be said that Protocol 7 to the Act of Accession concerns only the European Economic Community and in any case its aim is to align living standards in Greece with those of other European nations and not to enable Greece to achieve selfsufficiency in steel. Protocol 3, which does not apply to the European Coal and Steel Community either, expressly states that only exemption measures may be maintained and not the other measures provided for by the Greek Laws concerning the national development scheme. Just to refuse the imposition of quotas on Greek undertakings would make Article 58 meaningless. The argument that Article 58 does in theory apply to Greek undertakings but that measures, in this case quotas, cannot be imposed on them pursuant to Article 58 is quite contradictory and without foundation. Article 58 applies to all steel undertakings in the Community. As from the accession of Greece, the undertakings of that country have the same rights and obligations as the other steel undertakings in the Community in the absence of any express provision to the contrary. The purpose of the transitional period is not just to protect Greece but also the existing Community. The transitional period involves reciprocal rights and obligations for the contracting parties and in no way can it be construed as a preferential arrangement for Greece. The applicant's argument to the effect that the provisions of the Act of Accession constitute a lex speciales in relation to the provisions of the ECSC Treaty and the measures adopted pursuant to that Treaty is right only in so far as the provisions concerned establish substantive rules in materially the same field in derogation from the original rules.

c) The reliance placed on the general principle of legal certainty conflicts in this case with the express wording of Protocol 3 and with the principle of the primacy of Community law. Moreover, in the case-law of the Court the principle of legal certainty does not have the substance which the applicant attributes to it. The principle of the protection of legitimate expectation has no application in this case either. Legitimate expectation may be held only with regard to Community provisions from which private individuals expect or derive rights and not with regard to purely national provisions and certainly not with regard to national provisions which are replaced by provisions contrary to Community law. The concept of legitimate expectation is related to the maintenance of a system of rules established by Community regulations based on primary or secondary law which benefit individuals who might suffer damage if they were repealed without warning and with immediate effect. Those conditions do not obtain in this case. The applicant places reliance on the principle in a negative way in order to avoid the application of a new system which it considers undersirable. In any eyent the principle of the protection of legitimate expectation cannot have the effect of rendering inoperative Decision 1831/81 which is necessitated by an overriding public interest. The reply to the argument relating to an alleged breach of the principle of the right to property is provided by the case-law of the Court, according to which the guarantee afforded to the ownership of property cannot be extended to protect commercial interests, the uncertainties of which are pan of the very essence of economic activity.

d) The applicant is mistaken about the purpose and meaning of Decision 2804/81 and derives from them arguments which are wholly without merit. Two new factors explain why a special provision for undertakings whose plant is located in Greece was not introduced until 23 September 1981 and show that in introducing that provision the Commission was not in any way performing an obligation which it had under the Act of Accession. The first factor, which emerged only after 1 July 1981, was that, unlike Decision 2794/80, Decision 1831/81, as amended by Decision 1832/81 does not contain provisions allowing the general rules of the quota systm to be relaxed in order to help under ings facing exceptional difficulties as a ; esult of that system. The second new factor was that the information available to the Commission, which was still incomplete on 23 September 1981, indicated that there was a danger that “the current measures, and in particular Article 14, might not allow such undertakings to overcome the exceptional difficulties created by the specific situation in that country”, a situation which forces the Greek steel industry to make “constant efforts” to adjust itself. The time taken by the Commission to obtain information on the situation of Greek steel undertakings was due to those undertakings themselves and the applicant in particular. In any event Article 14a added by Decision 2804/81 grants no exemption to the Greek steel industry as a whole.

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

The applicant considers that if contrary to all probability general Decision 1831/81 were not to be considered incompatible with the transitional arrangments introduced by the Act of Accession it is in any case contrary to certain provisions of the ECSC Treaty and general principles arising from them.

a) Article 58 (2) of the ECSC Treaty allows quotas to be determined “taking account of the principles set out in Articles 2, 3 and 4” which are based on the fundamental principle of equal treatment. However, the quota system established by Decision 1831/81 creates serious inequalities detrimental to Greek steel undertakings. The “reference period” adopted was a period prior to the accession of Greece during which the rate of utilization of production capacity by Greek steel undertakings (35 to 40 %) was clearly lower than that of the Member States of the European Coal and Steel Community (approximately 65 %). The applicant's particularly low rate of utilization is due to the fact that its plant is recent and after July 1980 it sustained serious damage as a result of earthquakes. During the reference period 1978 to 1980 prior to accession the Community steel undertakings had created sufficient reserves whereas the less developed Greek undertakings do not meet even 50 % of the needs of the domestic market. The reserves of the steel undertakings of the other Member States put them in a clearly much better position and lead to discrimation against Greek undertakings. The Greek steel industry is also discriminated against because it must bear high financing costs whereas most European steel undertakings receive a substantial support from the State. Owing to the differences in the factual situation of the Greek steel industry compared to that of the Community steel industry during the reference period the uniform application of the quota system obviously results in discrimination and offends against the principle of proportionality inasmuch as it takes no account at all of the fact that in 1979 and 1980 steel production rose to 140 million tonnes in the Community countries whilst in Greece it did not exceed one million tonnes in the same period.

b) Article 1 of the ECSC Treaty envisages the creation of a common market on which conditions of competititon between undertakings must result from undistorted conditions of production. However, general Decision 1831/81 and the individual decision of 12 August 1981 are based on the premise that production conditions for Greek steel undertakings and Community steel undertakings are the same. They entirely overlook the enormous differences in structure, level of development and rate of utilization of capacity which distort competitive conditions to the detriment of the Greek steel industry. The second paragraph of Article 2 of the ECSC Treaty requires the Community to bring about conditions which will of themselves ensure the most rational distribution of production at the highest possible level of productivity. By imposing quantitative restrictions on production the decisions at issue waste the applicant's production capacity and prevent it from exploiting its new technology and remaining competitive; they inevitably have the effect of reducing employment and, in breach of Protocol 7, fundamentally disturb the Greek economy inasmuch as the steel industry is the most important sector of the country's heavy industry. In breach of Article 3 (d) and (g) of the ECSC Treaty the production quotas fixed by the decisions at issue for Greek undertakings make it impossible for them to expand and improve their production capacity, they constitute an obstacle to improvement of production conditions and establish a system which favours the large unprofitable groups in the North and is clearly unfavourable to the smaller, though more competitive and flexible, industrial undertakings. The failure, in the decisions at issue, to recognize clear differences between Greek steel undertakings and Community undertakings in their level of development and the introduction of a single quota system lead to the creation, in disregard of Article 4 (b) of the ECSC Treaty, of unwarrantable discrimination between producers whose undertakings operate under a different system. According to Article 5 of the ECSC Treaty, the Community must ensure the establishment of normal competitive conditions. But by imposing quotas on Greek undertakings' production the decisions at issue make the operation of those undertakings clearly uneconomic and deny them normal competitive conditions.

c) General Decision 1831/81 was published in the Official Journal of the Communities on 1 July and the amending Decisions 1832 and 1833/81 on 4 July 1981. The contested individual decision did not reach the applicant until 24 August, that is 54 days after the publication of the general decision on which it is based. The applicant cannot possibly comply with it. During the period of 54 days the applicant exhausted most of the production quota granted to it, which entailed the obligation to cease operating during the remaining 36 days. The Court has held that some decisions may be made retroactive provided that there is no breach of the principle of the protection of legitimate expectation. However, in this case there has been a failure to observe that principle. During the period in which the applicant had no reason to entertain any doubts it undertook by a contract made with Sitco Europa SA to export 400000 tonnes of finished products each year to the Soviet Union for a period of five years starting from 1981. Because the quota system was introduced so late the applicant was put under an obligation to repudiate its contractual obligations and to suffer considerable damage owing to the enforced shutdown of its production plant in clear breach of the principles of the protection of legitimate expectation and legal certainty.

The Commission considers that Decision 1831/81 does not infringe any provisions of the EEC Treaty or general principle of law governing its application and does not prejudice the principle of non-retroactivity.

a) The quota system established by Decision 1831/81 is perfectly fair and nondiscriminatory. It provides for all undertakings to have reference production which takes account not only of the best months of actual production during the period from July 1977 to June 1980 but also all the adjustments granted under the old system introduced by Decision 2794/80. Below a specific level of production small undertakings are not subject to the quota system. Reference quantities and consequently the part of quotas which may be delivered on the Common Market may be adjusted. Adjustments are also possible in the case of certain medium-sized undertakings faced with exceptional difficulties. Decision 2804/81 makes it possible to grant adjustments to Greek undertakings if the quota system causes one of them exceptional difficulties likely to prevent it from adapting itself to the structural developments in Greece's economy. The quota system was not imposed in order to redistribute the percentage rate of utilization of undertakings' production potential or to define the system of aid to the steel industry but solely to restore the balance between supply and demand. As far as the principle of proportionality is concerned, Decision 1831/81 is not an excessive and unacceptable intervention measure compared to the aim in view and did not impose disproportionate burdens on certain undertakings.

b) Article 3 of the ECSC Treaty lays down no fewer than eight distinct objectives and it is not certain that they can all be simultaneously pursued in their entirety and in all circumstances. A compromise must be found between those various objectives, especially in a period of crisis justifying the adoption of exceptional measures which derogate from the normal rules governing the working of the common market in steel and which may entail noncompliance with certain objectives laid down by Article 3, such as that mentioned in paragraph (b). It is the Commission's task to choose the objectives which it believes are necessary for solving the existing problems. The fact that Article 3 requires it to act in the common interest certainly does not mean that it must act by taking into account the interests of all the undertakings without exception. It weighs up the various interests and seeks to avoid damaging results if the decision which it adopts reasonably allows it to do so. The applicant relies on an erroneous interpretation of Article 2 of the ECSC Treaty inasmuch as it has recourse to purely national criteria and thereby restricts that provision to Greece, which is quite contrary to the spirit of the ECSC Treaty. Moreover, considering that there is a state of manifest crisis in the Community steel industry, Decision 1831/81 is not incompatible with the second paragraph of Article 2 of the Treaty. It is intended to avoid very serious economic and social problems which might occur as a result of a violent disturbance of the balance between supply and demand. Decision 1831/81 does not discriminate against Greek undertakings in any way at all. On the alleged infringement of Article 5 of the ECSC Treaty the Commission observes that Article 58 (2) only refers to the principles set out in Articles 2, 3 and 4 of the Treaty and that, moreover, it is going too far to claim that intervention by the Commission must not cause any change in an undertaking's competitive position.

c) As regards the principle of non-retroactivity, the Commission observes that the applicant itself is solely responsible for the time taken for it to receive the contested individual decision of 12 August 1981. It was not until 7 August that it sent to the Commission all the information which the Commission had asked for on 3 July and which was essential for the quotas to be fixed. In any event some decisions may be made retroactive provided that this does not offend against the principle of the protection of legitimate expectation. However, in this case that principle could have no application. General Decision 1832/81 was published in the Official Journal on 4 July 1981 and therefore from that time the applicant was aware of the introduction of the quota system, especially as on 3 July 1981 it had received a request for information from the Commission. It was therefore able to calculate, at least broadly, the quota which had to be imposed upon it pursuant to Decision 1832/81.

V — Oral procedure

At the sitting on 15 July 1982 Metallurgiki Halyps AE, represented by Mr Stamouiis, Mr Arvanitis and Mr Lykourezos, and the Commission, represented by Mr Kremlis, presented oral argument and answered questions put to them by the Court.

The applicant claimed in particular that since it produced only one kind of steel product, namely concrete reinforcing bars, the application of the same reduction coefficients to all undertakings constituted, to its detriment, a breach of the fundamental principle of equal treatment. It stated that the Commission has recognized this discrimination, at least implicitly, by adopting its Decision 533/82 of 3 March 1982 amending for the third time Decision 1831/81 (Official Journal L 65, p. 6).

The Commission reminded the Court that by a decision of 4 February 1982, adopted pursuant to Article 14a inserted into Decision 1831^81 by Decision 2804/81, it increased for the second time the quotas allocated to Metallurgiki Halyps for the third quarter of 1981. As a general point it must be noted that the applicant's actual production was lower than its quotas so that it has not suffered any damage.

The Advocate General delivered his opinion at the sitting on 7 October 1982.

At the sitting on 15 July 1982 the Court (Second Chamber) was composed of O. Due, President, P. Pescatore and A. Chloros, Judges.

Article 27 (2) of the Rules of Procedure states that only Judges who were present at the oral proceedings may take part in the deliberations. Owing to the death of Judge Chloros the Second Chamber decided, by an order dated 17 November 1982, to reopen the oral proceedings before the Chamber was newly constituted.

Mr Stamoulis, representing the applicant, and Mr Kremlis, representing the Commission, appeared before the Court at the sitting on 2 December 1982. During that sitting they confirmed the submissions and arguments advanced at the sitting on 15 July 1982 to which they referred.

At the same sitting the Advocate General confirmed his opinion delivered at the sitting on 7 October 1982.

Decision

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

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

Application of Decision 1831/81 to Greek undertakings

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Costs

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

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

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

1 Dismisses the application;

2 Orders the applicant to pay the costs.