JUDGMENT OF 15. 12. 1983 — JOINED CASES 31, 138 AND 204/82 METALLURGIKI HALYPS v COMMISSION

In Joined Cases 31, 138 and 204/82

THE COURT (Second Chamber) composed of: K. Bahlmann, President of Chamber, P. Pescatore and O. Due, Judges, Advocate General: P. VerLoren van Themaat 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 conclusions, submissions and arguments of the parties may be summarized as follows:

I — Summary of the facts

1. After arriving at the view in the third quarter of 1980 that the European steel industry was for the purposes of Article 58 of the ECSC 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 concluded that in order to restore balance between supply and demand it must intervene directly by means of binding measures relating to production. Consequently, 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 steel industry applicable until 30 June 1981.

2. Demand for the principal steel products continued none the less to decline and the slight increase in prices was seen to be insufficient in view of the financial burdens incurred by undertakings. Towards the middle of 1981 it thus appeared that the European steel industry was still in a period of manifest crisis and that the attainment of the aims 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 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 were adopted by a number of producers who accounted for a sufficiently high proportion of the relevant production. 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, 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 Decision 1832/81/ECSC of 3 July 1981 so as to include 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). According to Article 5 of Decision No 1831/81, the Commission was to fix each quarter for each undertaking its production quotas and the part of such quotas which might be delivered in the common market on the basis of reference productions and reference quantities and by the application of abatement rates to such production and quantities. In relation, more particularly, to Category V (concrete reinforcing bars), Decision 1831/81 provided, for products in that category and also for those in Category VI (merchant bars), a single quota based on only one reference production. Consequently, the rules for determining the reference production for those two categories were set out in Article 7a, which was inserted into Decision 1831/81 by Decision 1832/81. Having established that there had been a sudden severe deterioration in the situation on the market in concrete reinforcing bars, while the merchant bars market had remained unaffected, the Commission considered that the diverging trends on those two markets made it necessary to fix different rates of abatement and separate quotas. Consequently, by Decision 2804/81/ECSC of 23 September 1981 amending for the second time Decision 1831/81/ECSC (Official Journal 1981, L 278, p. 1) it amended and supplemented Article 7a of that decision, and laid down new rules for calculating the reference production for Category V to provide a basis for fixing quotas with effect from the fourth quarter of 1981. 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 within the common market by each undertaking are to be calculated by applying to its reference production the percentage of its deliveries within the common market compared with its total production during 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 within the common market. In particular, the abatement rate for products in Category V (concrete reinforcing bars), which had been fixed for the third quarter of 1981 by Commission Decision 1833/81/ECSC of 3 July 1981 (Official Journal 1982, L 184, p. 6) together with and at the same level as the rate for Category VI (merchant bars), was fixed separately for the fourth quarter of 1981 by Commission Decision 2979/81 of 15 October 1981 (Official Journal 1981, L 298, p. 11). 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 part of those quotas which may be delivered on the common market. Article 12 of Decision 1831/81 fixes the fine to be imposed on any undertaking exceeding its production quotas or the part of such quotas which may be delivered within the common market. Decision 1832/81 replaced Article 14 of Decision 1831/81 by a new provision which states that if, by virtue of the scale of the abatement rates imposed in respect of a given quarter, the quota system creates exceptional difficulties for an undertaking, the Commission is to make suitable adjustments to the reference production. Decision 2804/81 inserted after Article 14 of Decision 1831/81, as amended by Decision 1832/81, a new Article 14a which provides that, where the Commission finds, following receipt of a request from an undertaking whose plants are located in Greece, that the production quota system is causing the undertaking concerned exceptional difficulties likely to prevent it from adapting to the structural developments in that country's economy, it shall make an appropriate adjustment to the reference production figures for the undertaking and products in question. In accordance with Articles 5 and 9 (2) of Decision 1831/81, the Commission, in a letter of 11 December 1981, notified to the undertaking Metallurgiki Halyps AE, a company incorporated under the laws of Greece, with its registered office in Athens, its reference productions and reference quantities for products in Category V for the fourth quarter of 1981 and its production quotas and the part of those quotas which could be delivered within the common market. That decision was amended pursuant to Article 14a, inserted into Decision 1831/81 by Decision 2804/81, by a letter from the Commission of 5 January 1982, which increased the undertaking's production quota for the fourth quarter of 1981 from 46453 to 61123 tonnes and the part of the quota which could be delivered within the common market from 19309 to 26450 tonnes. The abatement rates for the first quarter of 1982 were fixed by Commission Decision 3328/81 of 20 November 1981 (Official Journal 1981, L 334, p. 34). On 14 December 1981, the Commission notified to Metallurgiki Halyps its reference production and reference quantities and its production quotas and quotas for delivery on the common market for the first quarter of 1982. Pursuant to Article 14a of Decision 1831/81, that decision was also amended by the Commission's letter dated 5 January 1982, which increased the production quota for Category V from 45231 to 61123 tonnes and the part of that quota which could be delivered on the common market from 18780 to 26450 tonnes. The Commission's decisions of 11 and 14 December 1981, as amended by the decisions of 5 January 1982, were once again amended by the Commission on 4 February 1982 as a result of supplementary information submitted to it by the undertaking. On the basis of Article 14a of Decision 1831/81 and in order to enable the undertaking to earn the profits needed to pay for its recent investment programme, the decision of 4 February 1982 increased (i) the production quota for Category V for the fourth quarter of 1981 from 61123 to 81144 tonnes and the part of that quota which could be delivered within the common market from 26450 to 33728 tonnes and (ii) the production quota for Category V for the first quarter of 1982 from 61123 to 79009 tonnes and the part of that quota which could be delivered within the common market from 26450 to 32804 tonnes. The abatement rates for the second quarter of 1982 were fixed by Commission Decision 532/82 of 3 March 1982 (Official Journal 1982, L 65, p. 5). Decision 1831/81 was amended for the third time by Commission Decision 533/82/ECSC of 3 March 1982 (Official Journal 1982, L 65, p. 6). In that decision the Commission stated that, in the case of concrete reinforcing bars, the fall in demand during the previous quarters and the high level of stocks had required very high abatement rates to be imposed; the reduction in demand had been reflected by a slump in market prices. Moreover, the system of quotas would create exceptional difficulties for small and medium-sized undertakings whose production depended almost exclusively on products in Categories IV, V and VI and to a considerable extent on the production of concrete reinforcing bars; the Commission therefore considered it necessary to establish less stringent quotas for those undertakings by means of a reduction in the abatement rates for the establishment of quotas. Decision 533/82 inserted in Decision 1831/81 after Article 14a an Article 14b, which provided that, for producers whose total production did not exceed 700000 tonnes in 1981 and whose production of Categories IV, V and VI accounted for at least 90% of their total production, the abatement rates in respect of Category V for the purpose of establishing production quotas and the proportion of the production quotas which could be delivered within the common market for the second quarter of 1982 were to be reduced by five percentage points if production of Categoiy V represented at least 30% of production of Categories IV, V and VI in 1981. On 24 March 1982 the Commission notified to Metallurgiki Halyps its reference productions and reference quantities and its production quotas and the part of those quotas which could be delivered within the common market for products in Category V for the second quarter of 1982. That decision was amended by a decision of the Commission of 4 June 1982 which increased the production quota from 40952 to 71808 and the part of that quota which could be delivered within the common market from 16928 to 29570 tonnes in respect of products in Categoiy V for the second quarter of 1982. Considering that the Community steel industry was still in a state of manifest crisis and that the attainment of the aims set out in Article 3 of the ECSC Treaty would be seriously jeopardized if the system of production quotas were not continued, the Commission adopted Decision 1696/82/ECSC of 30 June 1982 (Official Journal 1982, L 191, p. 1) extending by one year the system of monitoring and production quotas created by Decision 1831/81, which in its view had proved successful. In the case of wire rod, that decision stated that undertakings had not accepted voluntary delivery restrictions until the third quarter of 1981 and that in the following quarters that system had encountered opposition from a large number of undertakings. Since the situation on the market for wire rod had deteriorated considerably in the second quarter of 1982, as a result of a slackening in demand and the considerable fall in prices, particularly in the case of the lower qualities, and since the imbalance on the wire rod market was disturbing the market for reinforcing bars and merchant bars, the Commission found it necessary to include wire rod within the system of production quotas once again. The abatement rates for the third quarter of 1982 were fixed by Commission Decision 1697/82/ECSC of 30 June 1982 (Official Journal 1982, L 191, p. 42). On account of the worsening of the situation concerning reinforcing bars, Commission Decision 1698/82 of 30 June 1982 adjusting the abatement rates for Categoiy V products for the third quarter of 1982 in respect of certain undertakings (Official Journal 1982, L 191, p. 43) renewed, for certain small and medium-sized undertakings which depended almost exclusively on the production of products in Categories IV, V and VI and to a considerable extent on the production of reinforcing bars, the reduction in abatement rates introduced by Decision 533/82. By a decision of 6 July 1982 the Commission notified to the undertaking its reference productions and reference quantities and its production quotas and the part of those quotas which might be delivered within the common market, in respect of products in Categories IV and V for the third quarter of 1982.

II — Written procedure

On 18 January 1982 Metallurgiki Halyps AE brought an action for a declaration that the Commission's decisions of 11 and 14 December 1982, as amended by decisions of 5 January 1982, concerning the fourth quarter of 1981 and the first quarter of 1982 respectively, were void. That application was registered as Case 31/82.

On 30 April 1982 the undertaking brought an action for a declaration that the Commission's decision of 24 March 1982 concerning the second quarter of 1982 was void. That application was registered as Case 138/82.

On 11 August 1982 the undertaking brought an action for a declaration that the Commission's decision of 6 July 1982 concerning the third quarter of 1982 was void. That application was registered as Case 204/82.

The written procedure in the three cases 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.

By order of 20 April 1983 the Court decided to join Cases 31/82, 138/82 and 204/82 for the purpose of the procedure and the judgment.

By another order of 20 April 1983 the Court decided to assign the case to the Second Chamber pursuant to Article 95 (1) and (2) of the Rules of Procedure.

Following the judgment of the Court (Second Chamber) of 9 December 1982 in Case 258/81, between the same parties, the applicant, by a letter dated 4 July 1983, informed the Court, at the latter's request, that it considered that a ruling should be given in these applications on the submissions and arguments which were not examined or appraised in that judgment; in addition, is stated the grounds for annulment which it intended to pursue at the hearing and those which it was withdrawing.

III — Conclusions of the parties

The applicant claims in each of the cases that the Court should :

a) Admit the application as lawful and well-founded;

b) Declare void the contested individual decisions adopted pursuant to Decision 1831/81 and Decision 1696/82 respectively; and

c) Order the Commission to pay the costs.

The Commission contends in each of the cases that the Court should :

a) Dismiss the application as unfounded; and

b) Order the applicant to pay the costs.

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

Having withdrawn certain submissions set out in its applications, the applicant primarily bases its actions on objections of illegality directed against the general decisions — Decision 1831/81 (as amended by Decisions 1832/81, 2804/81 and 533/82) and 1696/82 — pursuant to which the contested individual decisions were adopted: the applicant alleges that the general decisions are in breach of Article 58 (2) and Articles 1 to 5, in particular Article 4 (b), of the ECSC Treaty.

In support of its applications in Cases 31 and 138/82, the applicant further claims that the contested individual decisions infringe Article 14a of Decision 1831/81.

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

A — Infringement of Articles 58 and 1 to 5 of the ECSC Treaty

The applicant considers that the general decisions on which the contested individual decisions are based are contrary to certain provisions of the ECSC Treaty and to the general principles arising from them, in particular the principle of equal treatment.

a) Article 58 (2) of the ECSC Treaty allows quotas to be determined “taking account of the principles defined in Articles 2, 3 and 4”, which are themselves based on the fundamental principle of equal treatment. However, the quota system established by Decision 1831/81 and extended by Decision 1696/82 creates serious inequalities to the detriment of Greek steel undertakings and of the applicant in particular. The “reference period” adopted was based on 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 considerably lower than that of undertakings in the European Coal and Steel Community (approximately 65%); the applicant's particularly low rate is due to the fact that its plant is recent and that 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 built up sufficient reserves, whereas the less developed Greek undertakings did not meet even 50% of the needs of the domestic market. The reserves held by steel undertakings in the other Member States put them in a much better position and lead to discrimination against Greek undertakings. The Greek steel industry is also discriminated against because it must bear high financing costs, whereas most European steel undertakings receive substantial support from the State. Owing to the difference in the factual situation of the Greek steel industry compared to 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 amounted 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 in which the conditions of competition between undertakings must result from undistorted conditions of production. However, the general decisions and the contested individual decisions 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.

c) 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 contested decisions waste the applicant's production capacity and prevent it from exploiting its new technology and from remaining competitive; they inevitably have the effect of reducing employment and fundamentally disturb the Greek economy because the steel industry is the most important sector of the country's heavy industry.

d) In breach of Article 3 (d) and (g) of the ECSC Treaty, the production quotas fixed by the contested decisions for Greek undertakings make it impossible for them to expand and improve their production capacity; they constitute an obstacle to the 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.

e) The failure, in the contested decisions, 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 who operate under different conditions.

f) By referring to Article 4 of the ECSC Treaty, Article 58 lays down the fundamental principle of equal treatment between the steel undertakings subject to the jurisdiction of the Commission. Since the crisis affects only certain categories of products, the fixing of a single abatement rate, applicable only to those categories, results in manifest inequality and hence in unjustifiable discrimination between producers. For undertakings manufacturing several categories of steel products, the abatement rate for the whole of their production clearly differs from that of undertakings whose production is limited to only one or a few products or that of undertakings which produce only products in the category subject to quotas. In fact, Decisions 1831/81 and 1696/82 classified all steel products into six categories and fixed uniform abatement rates only for certain products in Category I and for Categories IV, V and VI. The application of single abatement rates only to certain categories of products as regards all undertakings, irrespective of whether they produce those categories alone or also produce other categories of products not subject to the quota system, clearly makes undertakings subject to unequal treatment. Thus, for an undertaking manufacturing exclusively products in Categories IV and V, the reduction of the whole of its production fluctuates around a rate of 40 or 50%; on the other hand, an undertaking producing the six categories of products is only compelled to reduce its production as a whole by a much lower proportion. The general decisions at issue thus directly infringe the provisions of Articles 58 and 4 of the ECSC Treaty and the principle of equality which is laid down therein, in so far as they introduce “manifest discrimination between producers”. The contested individual decisions introduced such discrimination at the expense of the applicant, which manufactures solely products in Categories IV and V. It is true that Decisions 533/82 and 1698/82 provide for a reduction, for undertakings producing only a few products, of five percentage points in the abatement rate for products in Category V; however, that wholly arbitrary reduction does not restore the principle of equality in relation to the compulsory quota system. Equality can be restored only if and in so far as the reductions imposed are regulated in such a way that they represent the same rate of reduction in relation to the entire production of each undertaking. In the preamble to Decision 1698/82, the Commission itself acknowledged, indirectly but none the less clearly, the unequal treatment of a number of small and medium-sized undertakings which depend mainly on the production of concrete reinforcing bars and for which the reduction of the abatement rate by five percentage points by no means results in treatment comparable to that accorded to the large steel concerns.

g) According to Article 5 of the ECSC Treaty, the Community must ensure the establishment of normal competitive conditions. However, by imposing quotas on Greek undertakings' production, the contested decisions make the operations of those undertakings clearly uneconomic and deny them normal competitive conditions.

The Commission considers that Decisions 1831/81 and 1696/82 do not infringe any provision of the ECSC Treaty or any general principle of law governing its application.

a) The quota system established by Decisions 1831/81 and 1696/82 is perfectly fair and nondiscriminatory. It provides for all undertakings to have reference productions which take 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 certain level of production small undertakings are not subject to the quota system; reference quantities, and consequently the part of the quota which may be delivered within 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 them exceptional difficulties likely to prevent their adaptation to the structural developments in Greece's economy. The rate at which Greek undertakings use their quotas shows that the quota system does not place them in an unfair situation or discriminate against them. The quota system was not imposed in order to redistribute the rate of utilization of undertakings' production capacity or to define the system of aid for the steel industry, but solely to restore the balance between supply and demand. As far as the principle of proportionality is concerned, the contested decisions do not constitute excessive and unacceptable intervention, in relation to the aim pursued, and did not impose disproportionate burdens on certain undertakings.

b) It is difficult to understand why the applicant challenges the contested decisions on the basis of Article 1 of the ECSC Treaty, unless it considers that the difference in structures and level of development between the Greek undertakings and other European undertakings is such that their coexistence in the framework of a common market is not justified. However, Greece applied for and obtained entry to the European Coal and Steel Community, of which it is a full member.

c) 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, in view of the state of manifest crisis in the Community steel industry, Decisions 1831/81 and 1696/82 are not incompatible with the second paragraph of Article 2 of the Treaty: they are intended to avoid very serious economic and social problems which might occur as a result of a disturbance of the balance between supply and demand.

d) 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 problems that exist. 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 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. According to the case-law of the Court, the Commission may, in the common interest, use its power of decision according to the requirements of the circumstances, even to the detriment of certain individual interests.

e) The claims relating to the infringement of Article 4 (b) of the ECSC Treaty and of the prohibition of discrimination, to the detriment of Greek undertakings and the applicant in particular, are proved to be unfounded by the quantitative information available concerning their production and deliveries in the common market: in recent quarters they remained well within the quotas allocated to them. Those figures show that there is no discriminatory treatment in this case, nor even the slightest damage.

f) The applicant's conception of equal treatment is wholly mistaken and fallacious. The crisis facing the steel industry does not affect to the same degree the six categories of products, which cannot be regarded as a single whole. Each category must be treated separately, according to its particular characteristics and the development of the relevant market. A separate abatement rate was fixed for each of the categories of products referred to in the general decision, whilst for one of them an increase in production was authorized. Those different rates faithfully reflect the differential development of the market for the categories of products to which they relate; the application of a uniform abatement rate to the entire Community steel production would not result in the equal treatment of undertakings but would deprive the general decisions of any legal basis under Article 58 of the Treaty. The reduction in the abatement rates for small and medium-sized undertakings which comply with certain criteria is not at all arbitrary and does not constitute an acknowledgement on the part of the Commission that those undertakings are subject to unequal treatment. Treatment is unequal only where undertakings in the same situation are treated differently; in this case, undertakings which produce several categories of products are by their nature in a different position from undertakings producing a single product, which are consequently treated differently. There would be genuine discrimination between producers if different situations were treated in the same way. Equal treatment involves the sharing of cuts in production necessitated by the crisis in accordance with criteria chosen for all producers on the basis of objective data and in pursuit of the same common objective.

g) With regard to the alleged infringement of Article 5 of the ECSC Treaty, the Commission observes that Article 58 (2) refers only 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.

B — Infringement of Article 14a of Decision 1831/81

In support of its applications in Cases 31 and 138/82, the applicant claims that the individual decisions contested in those applications infringe Article 14a of Decisión 1831/81, as amended by Decisions 1832/81 and 2804/81.

Article 14a of Decision 1831/81 provides for an appropriate adjustment to be made to the reference production figures for products manufactured by an undertaking whose plant is located in Greece, where the Commission finds that the quota system is causing it exceptional difficulties likely to prevent it from adapting to the structural developments in that country's economy. The part of the preamble to Decision 2804/81 relating to that provision confirms the inappropriateness of applying any quota system to Greece during the transitional period, since it would jeopardize the industrial development of Greece and its adjustment to the level of development of the other Member States.

At the very least, Article 14a of Decision 1831/82 requires the Commission to fix, by individual decisions adopted in each case in relation to the steel undertakings operating in Greece, quotas which enable those undertakings to have a production which is no less than Community steel undertakings' rate of utilization of their production capacities; that interpretation is borne out by Article 2 of the ECSC Treaty, which requires compliance with the principle that undertakings in the Community should be treated equally.

However, in 1981 the average rate of utilization of the production capacities of Community steel undertakings was 63%, whereas the contested decisions permit the applicant a maximum rate of utilization of its production capacity of 54%.

The Commission considers that no text or general principle of law requires it to exempt Greek undertakings from the application of Article 58 of the ECSC Treaty. In particular, the insertion by Decision 2804/81 of Article 14a into Decision 1831/81 does not amount to the performance of an obligation which has its source in the Act of Accession: Article 14a does not grant general exemption from the quota system to the Greek steel industry as a whole; it merely permits an adjustment of the quotas for a particular undertaking and particular products.

Furthermore, it should be noted that the rate of utilization of the production capacity of steel undertakings is not among the criteria adopted by Decision 1831/81 for the fixing of quotas; nor does Article 14a require such a criterion to be taken into account when quotas are adjusted. The criterion based on the rate of utilization of production potential is linked to the criterion of production capacity. Previous judgments of the Court have acknowledged that the criterion based on the actual production of undertakings, chosen by the Commission, constitutes an equitable basis within the meaning of Article 58 of the ECSC Treaty.

V — Oral procedure

At the sitting on 6 October 1983 oral argument was presented by J. Stamoulis and C. Arvanitis, for the applicant, and by X. Yataganas and G. Kremlis, for the Commission.

The applicant submitted essentially that it was the victim of discrimination because, first, as an undertaking manufacturing only products in two categories, it was more seriously affected by the quota than undertakings manufacturing products in all categories and, secondly, Greek undertakings were penalized by the fact that their reference period related to a period prior to Greece's accession to the Communities.

The Commission relied essentially upon the absence of any interest in pursuing the applications, in view of the fact that the applicant did not use up its quotas. It also disputed the existence of s.ny discrimination and, in reply to ;he arguments relating to Article 14a of Decision 1831/81, referred to the recent judgments of the Court.

The Advocate General delivered his opinion at the sitting on 17 November 1983.

Decision

1. By three applications lodged at the Court Registry on 18 January, 30 April and 11 August 1982, Metallurgiki Halyps AE, a company incorporated under the laws of Greece, with its registered office in Athens, brought actions to have declared void the individual decisions by which the Commission fixed the applicant's reference production, reference quantities, production quotas and the part of those quotas which could be delivered within the common market as regards, respectively, rolled products in Category V (concrete reinforcing bars) for the fourth quarter of 1981 and the first quarter of 1982 (Case 31/82) and for the quarter of 1982 (Case 138/82) and as regards products in Categories IV (wire rod) and V for the third quarter of 1982 (Case 204/82). The general decisions on which those individual decisions were based were Commission Decision 1831/81/ECSC of 24 June 1981 (Official Journal 1981, L 180, p. 1), as amended in particular by Commission Decision 2804/81/ECSC of 23 September 1981 (Official Journal 1981, L 278, p. 1) and, in relation to the last application, Commission Decision 1696/82/ECSC of 30 June 1982 (Official Journal 1982, L 191, p. 1).

2. In support of its applications, the applicant pleaded a series of submissions alleging failure to observe the transitional provisions of the Act of Accession, contravention of Article 58 and of the principles of the ECSC Treaty, manifest misuse of power, inadequate statement of reasons and infringement of Article 14a of Decision 1831/81, as amended by Decision 2804/81.

3. Following the judgment of 9 December 1982 in Case 258/81 ([1982] ECR 4261) between the same parties, the applicant retained only two submissions: (a) one of the arguments set out as part of the submission relating to the contravention of Article 58 and of the principles of the ECSC Treaty and (b) infringement of Article 14a of Decision 1831/81.

Contravention of Article 58 and of the principles of the ECSC Treaty

4. The applicant pursues two lines of argument on this point. First, it claims that the extension to Greek steel undertakings of the general decisions of the Commission establishing a production-quota system has a discriminatory effect because of the differences in structure, level of development and rate of utilization of production capacity existing between Greek undertakings and those in the rest of the Community.

5. Secondly, it argues that the application of the Commission's general decisions has a more specific discriminatory effect in relation to it, owing to the fact that its production is concentrated on the two categories of steel products — wire rod in Category IV and concrete reinforcing bars in Category V — for which the restrictions on production are most stringent. On the other hand, for undertakings with a wider range of production, the average restriction of production is less significant, in view of the fact that certain products are wholly exempt from the quota system and others are subject to lower restrictions.

6. In relation to the first part of that submission, reference should be made to the abovementioned judgment of 9 December 1982 and to the judgment of 16 February 1982 in Joined Cases 39, 43, 85 and 88/81 (Halyvourgiki v Commission, [1982] ECR 593), in which the Court stated the legal justification for the extension to Greek undertakings of all the provisions adopted by the Commission under Article 58 of the ECSC Treaty since the entry into force of the Act of Accession.

7. Without repeating the statements contained in those judgments, the Court takes the view that, m the light of the arguments set out by the applicant in this case, it must draw attention more particularly to the following points.

8. Whilst considerations of economic policy such as those referred to by the applicant may be taken into account by the political authorities of the Community in the exercise of the powers conferred upon them by Article 58 of the Treaty, with a view to resolving certain special problems in the Greek steel industry, such considerations do not permit the legal validity of the provisions adopted by the Commission with regard to the applicant, pursuant to the general decisions in force, to be called in question.

9. Article 14a, which the Commission inserted into Decision 1831/81 recognized that special difficulties may arise for undertakings whose plant is situated in Greece. However, it should be stressed that that provision can apply only to individual undertakings by virtue of their particular situation.

10. The applicant's statement that the application of the quota system to Greek undertakings has the effect of discriminating against them in relation to steel undertakings in the rest of the Community arises out of a failure on its part to appreciate the true implications of the measures adopted under Article 58.

11. As the Court has repeatedly stressed, the purpose of the introduction of the production-quota system is to spread in an equitable manner among all undertakings in the Community the inevitable sacrifices entailed by the steel crisis, which is characterized by a reduction in demand and a fall in the level of prices. The consequences of that crisis affect all undertakings, whatever their geographical location and their individual state of development. The prob ems referred to by the applicant in connection with structure, level of development and rate of utilization of production capacity are not peculiar to it or to Greek undertakings but also arise for many other undertakings throughout the Community.

12. Moreover, the aim of decisions adopted under Article 58 is not, as the applicant appears to contend, to resolve problems which may result from differences in the structure or development of undertakings, but to share in an equitable manner the sacrifices necessitated by the attempt to overcome the crisis in the steel industry, regardless, moreover, of the individual situation of undertakings. Therefore, the fact that the Commission applied to the applicant rules adopted in order to resolve a problem which affects steel undertakings of all the Member States equally, regardless of their geographical location, cannot be regarded as discrimination.

13. It follows from the foregoing that the first part of the submission must be dismissed.

14. As to the second part of the submission, it should be noted, as the Commission rightly explained, that the differences in the restrictions on production, according to the different categories established by the successive general decisions, are justified by the fact that the crisis does not affect the various types of production to the same extent. In view of the principle of economy of action laid down in the first paragraph of Article 5 of the ECSC Treaty, which provides that “the Community shall carry out its task in accordance with this Treaty, with a limited measure of intervention”, the Commission was entitled to adjust its intervention measures, in relation to the different categories of products, to what appeared to be essential in order to restore the balance between production and demand.

15. The fact that the applicant is subject to relatively more severe restrictions because it has concentrated its activities on products particularly affected by the crisis, in comparison with undertakings whose production is more varied or biased towards products which are not as seriously affected, cannot be regarded as discrimination on the part of the Community.

16. The second part of the submission must therefore also be dismissed.

Infringement of Article 14a of Decision 1831/81

17. The meaning of the applicant's submission based on the infringement of Article 14a of Decision 1831/81 is not clear. It is apparent from the contested decisions that the applicant did in fact enjoy the benefits reserved by that provision to Greek undertakings. It does not complain that Article 14a was not correctly applied to it but criticizes the fact that the Commission did not attribute to it a wider meaning, so as to guarantee to all Greek undertakings a rate of utilization of their production capacity equal to the average rate of utilization of the other steel undertakings in the Community. It claims that that rate was 63% at the material time, whilst the contested decisions permitted the applicant a maximum rate of utilization of its production capacity of only 54%.

18. The answer to that argument must be that nothing in the scheme of Article 58 or the Act of Accession requires the Commission to adopt a general provision in favour of Greek undertakings such as that desired by the applicant. The introduction and adjustment of the special relief clause in favour of Greek undertakings falls within the Commission's discretion on matters of policy and the applicant has not put forward any grounds to warrant the view that the Commission exercised that discretion illegally.

19. As tor the criterion advocated by the applicant, namely the gurantee of a minimum rate of utilization of production capacity, it should be noted that the Court has repeatedly held that recourse to such a criterion would not permit the attainment of the objective laid down in Article 58 of the Treaty (see most recently the judgment of 11. 5. 1983 in Case 244/81, Klockner v Commission [1983] ECR 1451).

20. Finally, attention may be drawn to the theoretical nature of this discussion, since it is clear from the information provided by the Commission that, during the period in question, the applicant did not even succeed in using up the production quotas allocated to it.

21. This submission must therefore also be dismissed.

22. It follows from the foregoing that the application must be dismissed in its entirety.

Costs

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

24. 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.