JUDGMENT OF 29. 2. 1984 — CASE 270/82 ESTEL v COMMISSION

In Case 270/82

THE COURT (Fourth Chamber) composed of: T. Koopmans, President of Chamber, K. Bahlmann, P. Pescatore, A. O'Keeffe and G. Bosco, Judges, Advocate General: Sir Gordon Slynn 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 — Legal context of the action and statement of the facts

A — Legal context

Confronted with a manifest crisis in the steel market within the meaning of Article 58 of the ECSC Treaty, the Commission adopted general Decision 2794/80/ECSC of 31 October 1980 (Official Journal 1980, L 291, p. 1), amended by Commission Decision 3333/80/ECSC of 19 December 1980 (Official Journal 1980, L 349, p. 21), establishing a system of steel production quotas for undertakings in the iron and steel industry which was in force from 1 October 1980 until 31 June 1981. In about the middle of 1981, the European iron and steel industry was still in a period of manifest crisis and the Commission, by Decision 1831/81/ECSC of 24 June 1981 (Official Journal 1981, L 180, p. 1), amended by Decision 1832/81/ECSC of 3 July 1981 (Official Journal 1981, L 184, p. 1), by Decision 2804/81/ECSC of 23 September 1981 (Official Journal 1981, L 278, p. 1) and by Decision 533/82/ECSC of 3 March 1982 (Official Journal 1982, L 65, p. 6), established for undertakings in the iron and steel industry a new system of production quotas in respect of certain products, also based on Articles 47 and 58 of the ECSC Treaty, which was applicable for the period from 1 July 1981 to 30 June 1982.

Article 4 of Decision 1831/81 established a new system of production quotas for derived products in Category 1 (hot-rolled wide and narrow strip) as defined by Article 1 of that decision, namely the following products:

Categoiy la

hot-rolled wide strip for direct use and export,

hot-rolled wide strip for re-rolling or other conversion processes in other Community undertakings,

plate with a thickness of 3 mm or more, obtained by cutting hot-rolled wide strip,

hot-rolled strip less than 600 mm wide, including tube strip,

cold-rolled plate of 3 mm and over (cut or coiled);

Category Ib

cold-reduced sheet cut or coiled, with a thickness of less than 3 mm,

hot-rolled sheet in cut lengths, with a thickness of less than 3 mm,

cold- or hot-rolled sheet for the production of derived products of Categories Ic and Id in other Community undertakings;

Category Ic

hot-dipped galvanized sheet, cut or coiled,

galvanized sheets for the production of Category Id products in other Community undertakings;

Category Id

other coated flat products.

Article 5 of the decision provided that the Commission was to fix, each quarter, for each undertaking, its production quota and the part of such quotas that could be delivered in the common market, on the basis of the reference production and reference quantities of the undertaking concerned subject to certain abatement rates.

Pursuant to Article 6 of Decision 1831/81, the reference production of derived products in Categories la, Ib, Ic and Id for undertakings producing hot-rolled wide and narrow strip was calculated on the basis of the reference production for Category I. That in turn was calculated by finding the. arithmetical mean of two figures: the first figure was the arithmetical mean of production in three periods: the year 1974; the 12 calendar months — not necessarily'consecutive — of the period from July 1977 to June 1980 during which production of the four groups of rolled products I to IV, as defined in Article 2 of Decision 2794/80, was the highest; and the period of 12 months from July 1979 to June 1980. The second figure was an annual reference resulting from the production quotas fixed under Decision 2794/80 during the fourth quarter of 1980 and the first quarter of 1981, and was calculated according to a method specified in Article 6 (1) (b).

Reference production for Categories la, Ib, Ic and Id were calculated as follows: the production of each of those categories for the period of the 12 best months was converted into coil weight by applying various conversion coefficients. Division of those results by the production of hot-rolled wide and narrow strip in the same 12 best months yielded coefficients which were used to derive from the reference production established for the products of Category I according to the calculation set out in Article 6 (1) the reference production for the derived products expressed in coil weight. Such reference production was then expressed as weights of derived products by applying the conversion coefficients.

Article 8 provided that the reference quantities used to establish the proportion of the quotas that could be delivered on the common market by each undertaking were 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.

Under Article 9 (1) the Commission was to fix each quarter the abatement rates for establishing the production quotas and the part of those quotas that could be delivered on the common market. Under Article 9 (2) the Commission was to notify to each undertaking its reference production and reference quantities as well as its production quotas and the part of those quotas that could be delivered on the common market.

Article 10 of Decision 1931/81, which was completely new, laid down a procedure for adjusting the quota for products in Category la used in the form of hot-rolled products for the production in the Community of welded tubes with a diameter not larger than 406.4 mm; at the undertaking's request accompanied by proof of use for such purpose, the Commission was to adjust the quota and authorize the relevant deliveries.

Article 11 (4) of the decision provided that undertakings could, having made a prior declaration to the Commission, enter into arrangements with other undertakings during the first two months of any quarter for the exchange or sale of quotas or proportions of quotas pertaining to that quarter.

Article 12 provided that a fine, generally of 75 ECU for each tonne in excess, would be imposed on any undertaking exceeding its production quotas or part of such quotas that could be delivered on the common market.

B — Facts

By letter of 29 July 1981 the Commission, pursuant to the aforementioned decision, notified to Estel its production quotas and the proportion of those quotas that could be delivered on the common market (hereinafter referred to as “delivery quotas”) for the third quarter of 1981. For Categories la and lb, those quotas were fixed as follows (in tonnes):

Since that memorandum was of a provisional nature, the Commission fixed the “definitive” quotas for Estel, taking into account exchanges and purchases, as follows:

By letter dated 24 November 1981, Estel asked the Commisson pursuant to Article 10 of Decision 1831/81, to increase its production quota for products in Category Ia by 76811 tonnes. In reply to a telex message from the Commission of 1 December 1981, Estel explained its request in a letter of 16 December 1981. By letter of 3 February 1982, the Commission agreed to increase the quota by 66263 tonnes. Estel's total quotas for the third quarter of 1981 were therefore as follows (taking into account exchanges and sales of quotas arranged with other undertakings):

On 26 March 1982 the Commission informed Estel that it has exceeded its production quota as well as the part of the quota that could be delivered on the common market for the third quarter of 1981 by the following amounts:

The Commission stated that Estel had infringed the provisions of Decision 1831/81 and was therefore liable to the fine provided for in Article 12 thereof. In accordance with Article 36 of the ECSC Treaty, the Commission invited Estel to submit its comments on those findings within a period of eight days or to request a hearing by an official of the Commission. By letter of 9 April 1982 and in the course of the hearing of 4 June 1982, Estel, without in substance denying having exceeded the quotas, provided detailed explanations in answer to the Commission's complaints, in particular concerning the extent to which it had exceeded its quotas and the appraisal of the reasons therefore, considering how far the complaint against it was justified and alleging that it had been penalized twice.

On 13 August 1982, the Commission published the disputed individual decision setting out the definitive figures by which the quotas had been exceeded and imposing a fine of 3655590 ECU on Estel pursuant to Article 12 of Decision 1831/81.

Pursuant to Article 36, second paragraph, of the ECSC Treaty, Estel brought the present action, which was lodged at the Court Registry on 30 September 1982, for the annulment of the Commission's decision of 13 August 1982 which imposed upon it a fine for exceeding production and delivery quotas for the third quarter of 1981.

II — Procedure and conclusions

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. It did however ask Estel and the Commission to give a written reply to a question before 15 September 1983. The replies given by the Commission, on 14 September 1983, and by Estel, on 15 September 1983, are set out below.

By order of 13 July 1983 the Court decided to assign the case to the Fourth Chamber.

The applicant claims that the Court should:

1) Declare void, wholly or at least in part, the Commission's decision of 13 August 1982 addressed to Estel NV; In the alternative, reduce the fine imposed by the contested decision to nil or to such amount as the Court may think fit;

2) Take such other measures as the Court may consider necessary;

3) Order the Commission to pay the costs.

The Commission contends that the Court should:

1) Dismiss the application as unfounded;

2) Order the applicant to pay the costs.

III — Contentions and arguments of the parties

In the first contention in its application the applicant maintains that it was wrong of the Commission to find by implication, that Estel had exceeded its production and delivery quotas by 10548 tonnes for products in Category la — relating to products used by the purchasers for the manufacture of a certain type of tube — and to have imposed upon it a fine for exceeding its quotas in that way. In determining the method of calculating adjustments to be made pursuant to Article 10 of Decision 1831/81 the Commission should instead have taken into consideration Estel's good faith. Estel points out that under the system of general Decision 2794/80 tubes and certain of their partly finished products — in particular wide and narrow strip intended for the manufacture of welded tubes — were not subject to any production quota. It was only later that it became clear that the development of the market did not justify such a general derogation for material intended for the manufacture of welded tubes.

However, Estel suggested that Eurofer draw up special rules authorizing the quotas to be exceeded in the case of material supplied by Estel and other manufacturers to their own subsidiaries for the manufacture of small tubes, because there was substantial demand for such small tubes which were mainly used in the energy sector. Estel supplied almost exclusively its subsidiaries which were in direct competition with the manufacturers of weldless tubes, manufactured from material not subject to any quota system. Estel's suggestion was adopted by Eurofer, albeit in modified form, and the Commission adopted that Eurofer decision in Article 10 of Decision 1831/81.

The problem, according to Estel, is how to “adjust the quota” in accordance with the aforementioned provision. The differing interpretations of the adjustment method, of Estel and Eurofer on the one hand, and the Commission on the other, did not appear until the end of 1981, which explains the excess production of 10548 tonnes. Estel took as the basis for calculating the amount of adjustment individual deliveries during the course of the third quarter and during the period of reference to manufacturers of small tubes whose demand was greater, while the Commission based its calculation on the whole of deliveries during the third quarter, and in adjusting the quota took as its starting point all deliveries during the reference period, including those of products for which demand had not increased.

Estel claims that that method is contrary to the quota system because the Commission reasoned as if there existed a specific sub-quota for material intended for the manufacture of small tubes. By taking the entirety of deliveries as a starting point, the Commission failed to take account of the fact that the main purpose of Article 10 was to allow adjustments in individual cases only. According to that provision, a request must be submitted for a particular purchaser whose demand for small tubes has increased and it is necessary to show that the purchaser uses the strips for the manufacture of small tubes. There does not exist a “quota for tubes” but one quota for all products in Category la and undertakings may use each tonne of the production quota for any product or purchaser in the category concerned.

In Estel's view, it follows from the foregoing that the only relevant question for the determination of whether the quota must be adjusted in accordance with Article 10 is whether Estel delivers a larger quantity to a particular customer than that same customer's share in the production quota. Where such is the case, the quota must be adjusted for the various customers, because the supply of material intended for the manufacture of small tubes is subject to special rules. The Commission's point of view appears to be illogical, particularly in cases where no request for adjustment was made for certain purchasers and where no evidence can be produced and inasmuch as the purchasers in question are nonetheless counted in order to limit the adjustment. The consequence of that is that, once a request is submitted, the proportion of the quota relating to tubes may only be used for the manufacture of tubes.

According to the applicant, the difference between the methods of calculation in the present case resulted in the following figures (in tonnes):

In Estel's method of calculation, (a) and (b) vary according to the number of purchasers included in (c) whose demand for small tubes increased, while in the Commission's method of calculation, (a) and (b) are constant.

The applicant states that it did not know, and could not have known, until it received the telex message from the Commission on 1 December 1981, that the latter did not take account of individual purchasers in deciding whether or not to authorize an adjustment, but possibly applied another method of calculation. Moreover, it maintains that the Commission itself did not give a definitive opinion on the problem until about the middle of November 1981, as is shown by the exchanges of letters between Eurofer and the Commission. Therefore, although Estel and Eurofer had, by the beginning of 1982, accepted the Commission's point of view, in fixing the amount of the fine the latter ought to have taken into consideration the fact that Estel was able and entitled in good faith to apply its own method of calculation from the beginning of and during the course of the third quarter of 1981.

Estel's second contention is that the disputed Commission decision was incorrect in so far as it found that Estel had exceeded by 18525 tonnes the production and delivery quota for products of Category Ia, in particular those delivered to re-rolling mills and imposed a fine upon Estel for doing so. These were deliveries to other iron and steel undertakings which had nothing to do with the “voluntary” quota system adopted by iron and steel undertakings within Eurofer. The Eurofer quotas for products of Category Ia are not identical for every undertaking to the corresponding quotas fixed by the Commission for the undertaking because, inter alia, Eurofer does not take into account deliveries to re-rolling mills, so that the Commission quotas have to be redistributed within Eurofer. Eurofer undertakings have to submit to its Secretariat, before each quarter, forecasts of their deliveries to re-rolling mills. The definitive adjustment of the Commission quotas is based on those forecasts, as is shown by the Commission's letter to Eurofer of 8 July 1982, annexed to the application. Therefore, those obligatory transactions are included in the definitive quotas fixed by the Commission.

In accordance with that system, Estel states that it had to submit to Eurofer, before the third quarter of 1981, forecasts of its deliveries to re-rolling mills. However, since the system was new, Estel was not sure of the significance and the consequences of those forecasts and it did not know at that time that they were binding upon it and that the definitive production quota was fixed on the basis of the forecasts themselves. Therefore, after having submitted forecasts for deliveries of 50000 tonnes, Estel had agreed to supply further quantities to the re-rolling mills, with the result that it finally supplied to re-rolling mills 18525 tonnes more than forecast. It was unable to make up that difference by purchases or exchanges of quotas with other undertakings. The Commission's statement at the hearing of 4 June 1982, that it had nothing to with the Eurofer system was contradicted by the past and present collaboration between the Commission and Eurofer. Therefore, Estel states, if it had not ceded about 26000 tonnes of its quota under the Eurofer rules, it would barely have exceeded its production quota. Moreover, deliveries to re-rolling mills are very much a part of the restructuring of the iron and steel industry and do not disturb the market in any way.

In its third contention, the applicant states that in fixing the amount of the fine, the Commission wrongly failed to take account of the fact that the excess over the production quotas for products of Category Ia and Ib was attributable to the problems specific to deliveries to the North American market. In view of that fact, the degree of culpability attaching to Estel and the seriousness of the offence would have justified a lesser fine. In early 1981 Estel contracted to supply to purchasers on the North American market approximately 500000 tonnes of products in Categories Ia and lb, half being intended for customers in the Great Lakes region, where deliveries arc only possible in summer and early autumn for climatic reasons. In making those contracts Estel was unable to wait to be notified of the definitive quotas for the third quarter of 1981. It had attempted to exchange and to purchase sufficient quotas, but had been only partly successful with the result that it had exceeded its quotas for products of Categories Ia and Ib for the third quarter.

The applicant points out that that matter was the subject of arbitration within Eurofer as a result of which the fine imposed by Eurofer was reduced to 25 ECU per tonne “having regard to the good faith of Estel and to the exceptional circumstances”.

Estel claims that the Commission should have done likewise. If it was not prepared to reduce the excesses over the quotas by 10548 tonnes and 18525 tonnes (see the first and second contentions respectively), it ought to have treated the total excess over production quotas — namely 44751 tonnes, less the excess over delivery quotas, namely 19951 tonnes, that is 24800 tonnes — as part of the problems connected with exportation and should have fixed the penalty accordingly.

In its fourth contention, the applicant claims that in using a method of calculation of the fine which led to a double penalty the Commission had infringed Article 12 of Decision 1831/81, or, at least, Article 58 (4) of the ECSC Treaty and general principles of Community law. The Commission calculated the fine for each category of products separately on both the amount of the highest excess and 20 % of the amount of the other excess. In fact the highest excess was over production quotas, which included the (lower) excess over delivery quotas so that there was only one infringement.

The applicant is of the view that the purpose of the general decision had never been to impose cumulative penalties on excesses over production and delivery quotas. Both the preamble to the decision and the text of Article 12 and the spirit thereof indicate that only the highest excess would be penalized by a fine. That interpretation had been confirmed by officials of the Commission, even though the Vice-President of the Commission, Mr Davignon, had not replied to an enquiry from Eurofer on this point.

The applicant further maintains that to impose a double penalty is contrary to the general principles of criminal law as well as to the principles of sound management, of justice and of fairness, particularly when, as in the present case, the infringement involves a new decision and quotas based thereon, notification of which was late.

In its fifth contention, in the alternative, Estel challenges the Commission's refusal, in fixing the amount of the fine, to take into consideration the circumstances which led to the quotas being exceeded, the blame attaching to Estel and the seriousness of the infringement.

Finally, in the further alternative, the applicant's sixth contention is that the Commission infringed an essential procedural requirement by failing to provide a sufficient statement of the reasons for its decision with regard to the points which form the four main contentions of the application. It did not adequately deal with the particular circumstances of the excesses over the quotas or with the explanations given by Estel in the exchanges of letters and at the hearing.

That point of view is supported by a report from Professor Tiedemann (University of Freiburg im Breisgau, Federal Republic of Germany) which the applicant annexed to its reply.

Taking the view that all of Estel's contentions concern the manner in which the Commission applied Article 12 of Decision 1831/81, the Commission argues, in its general observations, that the text of that article obliges it to fix the fines for all undertakings objectively and automatically so that generally the amounts of the fines vary only in proportion to the excess over the quota. Subjective considerations connected to the particular position of the undertaking concerned have no place in that system. The severity of the system is justified by the need to ensure that the quota system is effective, in view of the seriousness of the situation facing the iron and steel industry. Strict and automatic application of Article 12 is the only way to avoid discrimination. Therefore, the Commission has never so far imposed fines of less than 75 ECU per tonne of excess over the quota on the common market.

In the alternative, the Commission answers each contention individually. As to the first contention, it maintains that Estel has effectively accepted the Commission's interpretation of Article 10 of Decision 1831/81 notified to Estel in the letter from the Commission of 3 February 1982. Since that letter must be regarded as an individual decision which Estel has not sought to have annulled, Estel cannot now attack it indirectly in the action against the decision disputed in the present proceedings.

With regard to the applicant's argument that it exceeded its quota in good faith, as a consequence of its different interpretation of Article 10, the Commission observes that that fact cannot be taken into consideration when applying Article 12 because that article provides for an objectively determined penalty for exceeding a quota and does not leave the Commission any discretion in determining the amount of the penalty. Likewise the degree of culpability and the seriousness of the contravention cannot be treated as relevant factors in fixing the fine.

Should the Court arrive at another interpretation of Article 12, the Commission maintains in the alternative that Estel knowingly exceeded its quota and that it must bear the responsibility for its own interpretation of Article 10 of

Decision 1831/81. Estel could have asked the Commission, as author of that decision, for a precise interpretation of Article 10 immediately after the decision was adopted, as other undertakings had done.

As for the second contention, the Commission also argues that Article 12 of Decision 1831/81 did not permit it, when fixing the fine, to take account of the subjective circumstances of the undertaking. Therefore, Estel cannot claim that it was uncertain of the precise meaning and effects of the provisions on deliveries to re-rolling mills.

If the Court construes Article 12 differently, the Commission maintains in the alternative that Estel did in fact exceed the quotas concerned and that cannot be justified by new Eurofer rules on the exchange of quotas. They were in fact internal Eurofer rules and no concern of the Commission, a fact which Estel, moreover, admitted during the hearing.

The Commission further disputes Estel's claim that deliveries to re-rolling mills do not disturb the market and that they are a normal part of re-structuring, since the products delivered by Estel in excess of its quota would otherwise have been delivered by another undertaking which might thus have made better use of its production capacity.

As to the third contention, the Commission reiterates its view that Article 12 does not allow it to take into consideration the particular circumstances of an undertaking. In the alternative, the Commission maintains that Estel could have avoided exceeding its quotas by reason of its deliveries on the American market by reducing its deliveries to other customers. The fact, that Estel had been unable, in the present case, to exchange or buy quotas in order to cover those excesses over its quotas is Estel's own responsibility.

With regard to Estel's fourth contention, the Commission states that the objection that the system of cumulative fines is illegal is inadmissible in so far as it is directed against Decision 1831/81 in its entirety.

Such an objection is admissible only in so far as the individual decision is based on the rules which are alleged to be unlawful, that is to say in the current, case on Article 12 of Decision 1831/81. The Commission further argues that the objection that Article 12 is unlawful is also inadmissible since it relates not only to the system of cumulating fines itself, but also to the legality of the system of fixing both the production quota and the part of that quota that may be delivered on the common market and would thus have the effect of undermining the system of Article 5. However the legality of Article 5 cannot be disputed in the present proceedings either.

If the Court decides that the objection of illegality is admissible, the Commission maintains, in the alternative, that it is not well founded. Article 12 is not incompatible with Article 58 of the ECSC Treaty nor with the general principles of criminal law nor with the principles of prudence, reasonableness and fairness. In the view of the Commission, the excess over the production quota and the excess over the quota that may be delivered on the common market constitute two different facts which are not necessarily linked. Each of those two excesses may be sanctioned separately and the two excesses combined constitute a more serious contravention on which a higher fine should be imposed. Consequently, the Commission contends that Article 12 does not impose a double fine for a single infringement but aggregates fines for two separate infringements.

The Commission submits that it has already dealt with Estel's fifth contention in its general introductory observations.

With regard to the contention that the statement of the reasons for its decision was inadequate, the Commission contends that a more precise statement of reasons was not necessary since it had strictly and automatically applied Article 12 of Decision 1831/81 which left it no discretion to take account of Subjective considerations.

In general observations in its reply, the applicant argues that the Commission's interpretation of Article 12 of Decision 1831/81 is incorrect and inadmissible. Estel maintains first that the Commission has already deviated from its interpretation in imposing upon Estel a penalty of less than 75 ECU per excess tonne, namely a fine of 15 ECU per tonne on the lower excess tonnage. Secondly, the applicant denies that the text of Article 12 is clear with the word “generally” indicating a strictly automatic procedure allowing the Commission no discretion. In Joined Cases 154, 205, 206, 226 to 228, 263 and 264/78, 39, 31, 83 and 85/79 (Judgment of 18 March 1980, Valsabbia and Others ν Commission [1980] ECR 907, at p. 983), the Commission itself put forward a different point of view, namely that the word “generally” implies that the Commission may nonetheless take into consideration individual circumstances.

The applicant also refers to the view expressed in the opinion of Professor Tiedemann that Article 12 does not exclude some degree of “individualization” since the terms of the provision themselves state that the fine is only “generally” of 75 ECU. That assertion is confirmed by the use of the verb “may” instead of “must” in the second paragraph of Article 12. If the Commission had wished to establish a new system of automatic sanctions with wider scope, that should have been stated unambiguously in the text of the decision.

Moreover, the applicant submits that the Commission's view is not compatible with Article 36 of the ECSC Treaty. The Commission was in breach of the first paragraph of Article 36 under which it must, before imposing a pecuniary sanction, give the party concerned the opportunity to submit its comments. That “right to be heard” is one aspect of the fundamental legal right to a “fair procedure” and constitutes an essential procedural requirement. Although the decision records that Estel's observations had been examined, the Commission took no account of them and now declares in addition that it was not in a position to do so because of the terms of Article 12. As a result Estel's right to be heard was deprived of any value.

Moreover the second paragraph of Article 36 provides that the Court has unlimited jurisdiction in appeals against

pecuniary sanctions imposed by the Commission so the Court has a total discretion with regard to all the circumstances of law and of fact which have led to the imposition of the sanction. The system advocated by the Commission would necessarily mean that legality would be reviewed with regard only to the grounds set out in Article 33 of the ECSC Treaty, and that would be contrary to Article 36 of the Treaty.

In any event, there is nothing in the ECSC Treaty, or in particular in Article 58, empowering or authorising the Commission to take account of individual circumstances.

The Commission had acted simultaneously in breach of the fundamental principles of natural justice, namely the principles nullum crimen, nulla poena sine lege, and nulla poena sine culpa, of the principle of proportionality and of the “principle of equality”, whose place in the law of the Member States and in Community law was demonstrated in the report of Professor Tiedemann and in an article by Professor Jescheck. Moreover the Court has also recognized that an error may in any event influence the amount of a sanction. The concept of an “objective” and “automatic” fine, on the other hand, is contrary to the law of most Member States, as was also shown in the Tiedemann report.

Returning to its first contention, Estel points out that during the third quarter of 1982, the Commission did not expressly specify how the adjustment of quotas pursuant to Article 10 was to be carried out. The method applied by Estel was fair and entirely justifiable, and Estel was not aware that it was prohibited to exceed the quotas. Following publication of the quotas, there remained only two months of the third quarter to solve many problems. In ruling on the amount of the fine, the Court should take into consideration that, even if Estel is guilty of an infringement, the blame attaching to it is small.

As for the second contention, the applicant explains that it thought that the required forecasts were for guidance and that they could be increased during the quarter. The forecasts proved to be binding and the excess over the quota caused problems because the Commission did not agree to a “transfer” to the fourth quarter.

Enlarging on its fourth contention, Estel claims that the system of sanctions advocated by the Commission obliges undertakings that can sell an extra amount on the common market to reduce their exports by an equivalent tonnage and that is contrary to Decision 1831/81 according to which exports are not restricted.

With regard to the statement of reasons for the decision, the applicant submits that they were not only insufficient, but also ambiguous and contradictory, and that the decision is therefore illegal. In those circumstances there is a breach of Community law independently of the question whether or not the Commission was empowered and obliged to impose a fine automatically.

In its rejoinder the Commission stresses, with regard to the first contention, that authorizing the adjustment of quotas pursuant to Article 10 of Decision 1831/81 was a matter for the Commission and that undertakings were not allowed to increase, on their own initiative, the size of the quotas allocated to them. It states, in the alternative, that other undertakings had asked it what method of calculation it applied and that it notified them during the third quarter; as evidence of that assertion, it offered to call Mr Rössig, a member of its staff, as a witness. The Commission also informed Eurofer by letter of 10 November 1981 of the method of calculation, making reference to oral information given previously. The Commission does not accept that the Estel method of calculation is justifiable, still less that it is the clearest. In addition to effectively creating the possibility of additional deliveries to tube manufacturers, when there was no need for them, it also increased a production quota and delivery quotas for other purposes. The Commission maintains that the decision of 3 February 1982 adjusting Estel's quotas pursuant to Article 10, could no longer be disputed whether directly or indirectly by means of an objection of illegality.

In answer to Estel's second contention, the Commission admits that it had indeed declared its readiness, when applying of Article 11 (4) to exchanges or sales of quotas, to take account of what was arranged by Eurofer. However that did not mean that it was bound to take into account any misunderstanding caused by an undertaking or a disagreement within Eurofer concerning its internal rules. In any event, there had been several ways open to Estel of avoiding exceeding its quota for the third quarter of 1981.

With regard to the fourth contention raised by Estel, the Commission observes that the imposition of a fine for exceeding a quota must be examined in close connection with the system of production quotas. The assessment of the interest of undertakings that is reflected in the fixing of quotas is also necessarily of decisive importance in the assessment of interests which underlies the first paragraph of Article 12. The crisis in the iron and steel industry calls for solidarity between all undertakings, which requires them all to comply with their quotas.

Thus, it is difficult, in view of its size, to consider that the fine provided for by Article 12 is a “penal” sanction. The sum of 75 ECU is not proportional to the value of the excess production. However, it is of the same order of magnitude as the proportion of fixed charges corresponding to each additional tonne produced in excess of the quota. That fine may therefore be compared with a levy which cancels out the economic advantage gained by an undertaking on exceeding a quota calculated as a flat rate.

With regard to the fine of 15 ECU peltonne that it imposed upon Estel for exceeding the delivery quota, the Commission observes that it related to a separate infringement and that in reducing the standard fine it had taken into consideration the fact that there were two infringements side by side and not subjective factors specific to the understanding. It points out, in addition, that Article 12 provides that fines shall be imposed and not merely that they may be imposed.

With regard to the fifth contention, the Commission emphasizes that it complied with the relevant procedural requirements and that written and oral discussion were still useful, even if it was not possible to take into account Estel's subjective position. It rejects Estcl's argument that the latter's right to be heard, guaranteed by the first paragraph of Article 36 (1) of the ECSC Treaty, was thereby infringed. Similarly it rejects Estel's allegation that the first paragraph of Article 12 of Decision 1831/81 purports to restrict the unlimited jurisdiction of the Court in any way. Article 58 (4) of the ECSC Treaty, for its part, gives the Commission the necessary power to derogate from provisions of the Treaty dealing with a normal situation, in order to take into account the requirements of a manifest crisis. Finally, there is a further provision of Decision 1831/81, namely Article 14, which, in certain circumstances, allows account to be taken of exceptional difficulties facing an undertaking.

The Commission repeats that the general principles of Community law cited by Estel have not been violated and that Estel's arguments on those points are not well founded. Article 12 is not an imprecise and uncertain provision open to different interpretations; the principle in dubio pro reo is therefore not applicable here. Estel's argument based on the maxim nullum crimen sine lege is not relevant to the facts of the case. Estel was mistaken not as to whether what it was doing was punishable but as to the extent to which the Commission might mitigate the punishable nature of its actions by an ex post facto adjustment of the quota.

With regard to the failure to give an adequate statement of reasons for the individual decision, the Commission is of the opinion that it suffices, according to the case-law of the Court, to set out “the principal issues of law and of fact upon which it is based and which are necessary in order that the reasoning which has led the Commission to its decision may be understood” (Judgment of 4 July 1963 in Case 24/62 Germany ν Commission [1983] ECR 63, at p. 69), without discussing objections which may be raised against the reasons given.

IV — Replies to the question put by the Court

The Court invited Estel and the Commission to give their views on the question whether the production in respect of which the fines referred to in Annex 10 to the application were imposed was also the subject-matter of a fine imposed by the Commission for infringement of Decision 1831/81.

Estel replied to the question in the affirmative. With regard to the exports referred to in the third complaint, it added that the Commission, like the Eurofer arbitrators, had imposed a fine in respect of the total excess over production quotas less the total excess over delivery quotas. The difference between the two excesses could be ascribed to exports to the United States.

It offered to produce evidence to show that deliveries to the United States were at least equal to that difference. In tonnage figures, the difference between the excesses over delivery quotas and the excesses over production quotas subject to fines in Categories la and lb amounted to a total of 24800 tonnes, while the Eurofer arbitrators imposed a fine based on 23623 tonnes (at 25 ECU per tonne). The difference between the two figures was due to the fact that Eurofer used a different method of calculation.

The Commission replied that the production which it took into account in calculating the fines in question included the excess production established by the Eurofer arbitration court and set out in a document entitled “Encloure 3”, which is included in Annex 10 to the application. On the basis of the information at its disposal, the Commission presumes that Eurofer did not levy fines for production in excess of that on which the Commission imposed fines.

V — Oral procedure

At the sitting on 19 October 1983 oral argument was presented by the following: T. R. Ottervanger, Advocate, for Estel, and R. Wägenbaur and J. Bourgeois, members of the Commission's Legal Department, acting as Agents, assisted by P. V. F. Bos, Advocate, for the Commission.

The Advocate General delivered his opinion at the sitting on 30 November 1983.

Decision

1. By application lodged at the Court Registry on 30 September 1982, the company Estel NV (hereinafter referred to as “Estel”), of Nijmegen, brought an action under Articles 33 and 36, second paragraph, of the ECSC Treaty for a declaration that the Commission Decision of 13 August 1982 imposing on it a fine of 3655590 ECU, that is to say HFL 9520472 is void.

2. The reasons given for the decision are based on the fact that during the third quarter of 1981 Estel exceeded by 30909 tonnes the production quota for Category Ia products, by 13842 tonnes that for Category Ib products and by 19951 tonnes the portion of the production quota for Category la products which could be delivered within the common market; those quotas had been allocated to Estel under the system of production quotas introduced by Commission Decision 1831/81/ECSC of 24 June 1981 (Official Tournai 1981, L 180, p. 1).

3. It should be noted that that decision introduced a system of steel production quotas for undertakings in the iron and steel industry, pursuant to Article 58 of the ECSC Treaty. Article 5 of the decision provides that, each quarter and for each undertaking, the Commission is to fix production quotas and the portion of those quotas which may be delivered within the common market, on the basis of reference productions and quantities, subject to certain abatement rates. The first paragraph of Article 12 of the same decision provides that a fine, generally of 75 ECU for each excess tonne, is to be imposed on undertakings which exceed their production quotas or the part of those quotas which may be delivered within the common market; the second paragraph provides that, “if an undertaking's production exceeds its quota by 10% or more, or if the undertaking has already exceeded its quota or quotas during one of the previous quarters, the fine may be up to double that amount per tonne. The same rules shall apply to any excess over the quantities which may be delivered on the common market.”

4. By letter of 29 July 1981 the Commission, pursuant to Decision 1831/81, informed Estel of its production quotas for the third quarter of 1981 and of the portion of those quotas which could be delivered within the common market. By letter of 24 November 1981 Estel asked the Commission to increase its production quota for Category Ia products by 76811 tonnes, pursuant to Articles 10 of Decision 1831/81. However, by letter of 3 February 1982, the Commission granted Estel an increase of only 66263 tonnes, leaving a difference of 10548 tonnes. On 13 August 1982 the Commission adopted the contested decision, fixing the final figures for the excesses over the quotas and imposing on Estel a fine of 3655590 ECU, pursuant to Article 12 of the general decision.

5. By the present action the applicant claims primarily that the decision imposing the fine should be declared void, either wholly or in part, or, in the alternative, that the fine should be reduced to nil or to such amount as the Court may think fit. The submissions put forward in support of the application concern the absence of fault and the existence of special circumstances, the breach of general principles of law and failure to give adequate reasons for the decision.

The existence of special circumstances

6. The applicant maintains that because of the special circumstances of this particular case no fine could be imposed, or the fine should at least have been reduced. In that connection the applicant argues primarily that the Commission's implied complaint in two isolated cases in which quotas were exceeded was misconceived and, in the alternative, that the Commission refused, in fixing the amount of the fine, to take into account the circumstances which led to the quotas being exceeded, the blame attaching to Estel and the degree of gravity of the infringement; with regard to a third isolated case, the applicant again maintains that, the Commission failed to take into account the particular circumstances in which the quota was exceeded, the low degree of blame attaching to Estel and the degree of gravity of the infringement.

7. In those isolated cases the quotas for the following products were exceeded: Category la products used by buyers in the manufacture of small tubes (heading 1 below), Category Ia products delivered to re-rolling mills (heading 2 below) and Category la and lb products intended for delivery on the North American market (heading 3 below).

1. Products used in the manufacture of small tubes

8. In its first submission, concerning excess production of 10548 tonnes, the applicant refers to Article 10 of the general decision, Decision 1831/81, which is worded as follows:

“With regard to products of Category la which are used in the form of hot-rolled products for the production in the Community of welded tubes with a diameter not larger than 406.4 mm, the Commission shall, at the undertaking's request accompanied by proof of use for such a purpose, adjust the quota and authorize the relevant deliveries.”

9. With reference to the method of calculation to be used in adjusting the quota, as provided for in the above-mentioned article, the applicant claims that it was entitled to believe in good faith at the beginning of and during the third quarter of 1981 that the Commission would apply the same method as the applicant and that it neither knew nor could have known that the Commission would apply a different method less favourable to the applicant until it received a telex message from the Commission on 1 December 1981. Furthermore, the applicant maintains that the Commission itself did not arrive at a final opinion on the applicable method until about the middle of November 1981 and that it only informed the applicant of its opium in a letter of 3 February 1982. The Commission thus infringed Article 36 of the ECSC Treaty and also several general principles of Community law, namely the principles of legality (“nullum crimen sine lege”), proportionality and equality.

10. The Commission contends that neither subjective considerations such as Estel's alleged good faith, nor the special circumstances, nor the degree of blame, nor the gravity of the infringement could be taken into account in fixing the fine since, according to Article 12 of the general decision, the fine is of a strict and automatic nature, so that the Commission fixes it with reference only to the amount of excess production and has no discretion in determining the amount of the penalty. It maintains, in the alternative, that Estel knowingly took the risk of over-producing and that in order to avoid this it could have asked the Commission for the correct interpretation of Article 10, as other undertakings did. Moreover, the Commission had informed Eurofer — a private association of organizations and undertakings in the European steel industry, whose object is cooperation between its members and the protection of their interests, particularily vis-à-vis the Commission — of the method of calculation in a letter of 10 November 1981, which referred to previous discussions. Finally, the Commission maintains that Estel did in the end admit that the Commission's method was correct and did not dispute the quotas.

11. It should first of all be noted that the Commission decisions of 29 July 1981 and 3 February 1982 are now definitive, since they were not challenged within the time-limits laid down by the Treaty. The Court has consistently held that an applicant may not, in the course of proceedings for the annulment of an individual decision, raise by way of objection the illegality of another individual decision which was addressed to him and which has become definitive. The application is therefore restricted to submissions and arguments directly concerning the contested decision.

12. With regard to the alleged automatic nature of the fine, it should be noted that the Commission may and is indeed obliged to vary the amount of the fines in exceptional cases according to the circumstances and gravity of the infringement. The Court has already had occasion, in its judgment of 16 November 1983 (Case 188/82, Thyssen, [1983] ECR 3721), to hold, in relation to Article 9 of Decision 2794/80, that although the fine should normally be fixed at an amount of 75 ECU per excess tonne the circumstances and gravity of the infringement may justify a departure from the general rule and the imposition of a reduced fine. In the present case exceptional circumstances do justify such a departure.

13. In that regard it must be observed that the action concerns the first quarter in which Article 10 of Decision 1831/81 — a completely new provision — was applicable, that the wording of that provision gave no indication of the method of calculation to be used for adjusting the quota and that undertakings could not apply for adjustment of the quota and authorization to make the relevant deliveries until after the deliveries had been made, with the result that, if the Commission adjusted the quota, it did not do so until after the end of the quarter concerned, as in the present case.

14. It follows that during the period in question undertakings may have been in a state of uncertainty as to the method to be applied for calculating the adjustment, although the method applied by the applicant was not the only reasonable one.

15. In those circumstances the Commission should itself have informed the undertakings concerned of the method of calculation which it intended to apply and should have done so at the beginning of the quarter in question. Since it did not do so, it contributed to the uncertainty over the correct method of calculation. Although Estel could have avoided exceeding its quota by asking the Commission to provide it with the method of calculation, the proper administration of the steel-quota system is clearly the Commission's responsibility.

16. There are therefore grounds for finding, in the applicant's favour, that a situation existed which warranted an assessment different from that of the Commission with regard to the gravity of the infringement and the fine which should be imposed for the excess production.

2. Products delivered to re-rolling mills

17. The applicant submits that the reason for which it exceeded the quotas for Category la products delivered to re-rolling mills was that its forecast deliveries to re-rolling mills for the third quarter of 1981 were lower than the actual deliveries which it was obliged to make under the agreements concluded within Eurofer and that it was not able to make up the difference by buying or exchanging quotas. Since this Eurofer system was new, Estel had no means of knowing that the forecasts were binding on undertakings and served as the basis for the definitive production quota fixed by the Commission. In fixing the amount of the fine, the Commission was therefore obliged to take into account Estel's mistake and the fact that the Eurofer and Community systems were interdependent.

18. The Commission's reply to that submission is that the forecasting system is a matter pertaining to the internal affairs of Eurofer and is not subject to the Commission's control; it was not for the Commission to take into account an undertaking's possible misunderstanding of the significance of that system. Furthermore, there were a number of ways in which Estel could have fulfilled its obligations under the Community quota system; it could, for example, have transferred an order to another supplier, exchanged or bought a quota, delivered that part of the order which exceeded the quota during the following quarter or delivered smaller quantities to buyers who were not regular customers.

19. It must be accepted that Estel's production in excess of its quota was, as the Commission has rightly maintained, due to the agreements concluded within Eurofer and to Estel's uncertainty as to the meaning of those agreements. Estel's quotas were fixed clearly and unambiguously by the Commission so that Estel could not be in any doubt as to its obligations under Community law. As a result a mistake on the part of Estel concerning the volume of transactions which it was obliged to carry out under the Eurofer agreements could in no way justify a breach of its obligations under the Community production-quota system and does not constitute a circumstance which justifies a reduction in the fine.

20. The supplementary argument of Estel to the effect that the excess production was part of the restructuring of the steel industry and that it did not disturb the market cannot be accepted in relation to a system based on the allocation of well-defined production quotas to particular undertakings, with a view to combatting a manifest crisis in the steel industry.

21. This submission must therefore be rejected.

3. Deliveries on the North American market

22. The applicant claims that the Commission was wrong not to take into account, in fixing the amount of the fine, the fact that the applicant had exceeded the production quota in respect of deliveries on the North American market as a result of specific problems connected with exportation to that market and that when the contracts in question were concluded the continuation of the production quota system beyond 30 June 1981 and the specific character of the system were not foreseeable. The deliveries in the area of the Great Lakes could only be made in summer since the climate of that region is such as to render buyers inaccessible throughout the remainder of the year. Furthermore, Estel was not able to buy or exchange enough quotas to avoid excess production.

23. It must first be pointed out that production in excess of quotas due to large deliveries outside the Community does not justify a fine lower than would be appropriate in the case of excess production due to deliveries within the Community itself. In any event, the conduct of the business and the risks arising therefrom are the responsibility of the undertakings themselves, and in planning their activities they must take into consideration all relevant circumstances, such as any problems of transport linked to the climate of the country of destination. Such external circumstances cannot therefore relieve the applicant of its obligation to observe the quotas. The system of production quotas, which is designed to overcome the manifest crisis in the steel industry, would be seriously undermined if, by pleading such external circumstances, undertakings could free themselves from restrictions and exceed at will the production quota allocated to them.

24. This submission must therefore be rejected.

The question of the “double penalty”

25. The applicant maintains that the method used by the Commission in calculating the fine resulted in Estel's being penalized twice for excess production of 3930 tonnes. The Commission imposed separate penalties on the production in excess of quotas and on the production in excess of the portion of those quotas which could be delivered within the common market, that is to say not only on the greater excess but also on the smaller excess which was already included in the greater excess. According to the applicant, cumulative penalties of this kind are not compatible with Article 12 of Decision 1831/81. If they do not conflict with that article, they are, the applicant maintains, contrary to Article 58 (4) of the ECSC Treaty and to various general principles of Community law, in particular the principles of sound administration, justice and fairness.

26. The Commission replies that Article 12 does not provide for a double fine for a single infringement, but for two distinct fines for two separate infringements, and is therefore compatible with Article 58 of the ECSC, Treaty and with the general principles of law. With regard to the supposed ¡Illegality of Article 12, the Commission raises an objection of inadmissibility against this submission, in so far as it is directed against Decision 1831/81 as a whole and in particular Article 5.

27. It must be pointed out that Article 5 of Decision 1831/81, in conjunction with Article 12 of the same decision, imposes two distinct obligations on the undertakings concerned, namely an obligation to comply with the production quotas and an obligation to refrain from exceeding the portion of those quotas which may be delivered within the common market. Whilst the restriction of deliveries within the common market serves to restore the balance of supply and demand within that market, the restriction of the total production of undertakings is designed essentially to avoid surplus production which, because of the crisis, could not be disposed of even by way of export. It is apparent therefore that the two restrictions are intended to protect two distinct interests of the Community; that conclusion is confirmed by Point 5 of the preamble to the decision.

28. Consequently, it must be acknowledged that an undertaking which fails to fulfil its above-mentioned obligations, by exceeding both figures at the same time, commits two distinct infringements of the decision in question. It follows that the Commission may in those circumstances impose two fines to be calculated separately.

29. It follows that the applicant's submission concerning an alleged double penalty is unfounded and that it is therefore unnecessary to consider the admissibility of the action, in so far as the unlawfulness of Article 12 is concerned.

30. This submission must therefore also be rejected.

The failure to give adequate reasons

31. It is clear from the foregoing that the submission based on the failure to give adequate reasons does not differ from the submissions on substantive issues considered by the Court.

The amount of the fine

32. In accordance with paragraph 16 above, the fine imposed by the Commission should be reduced, solely in so far as it relates to the production of 10548 tonnes in excess of the production quotas for Category la products. The total fine should therefore be fixed at 3260040 ECU.

Costs

33. According to Article 69 (2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. However, under Article 69 (3), where each party succeeds on some heads and fails on others, or where the circumstances are exceptional, the Court may order that the parties bear their own costs in whole or in part.

34. Since both the applicant and the Commission have succeeded in some of their submissions and failed in others, they should bear their own costs.

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

1 Reduces the fine imposed on the applicant to 3260040 ECU, or HFL 8490318;

2 Dismisses the remainder of the application;

3 Orders the parties to bear their own costs.