JUDGMENT OF 12. 7. 1984 — CASE 81/83 BUSSENI v COMMISSION

In Case 81/83

THE COURT (Second Chamber) composed of: K. Bahlmann, President of Chamber, P. Pescatore and O. Due, Judges, Advocate General: C. O. Lenz Registrar: D. Louterman, 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 — Relevant provisions and outline of the facts

1. Relevant provisions

a) Since the steel industry was facing a period of manifest crisis within the meaning of Article 58 of the ECSC Treaty, the Commission introduced, by Decision No 2794/80 of 31 October 1980 (Official Journal 1980, L 291, p. 1), a system of steel production quotas for undertakings operating in the Community iron and steel industry, which was in force from 1 October 1980 to 30 June 1981. Articles 2 to 4 of the decision provide that the Commission is to fix, in respect of the undertakings and the products to which the system applies, quarterly production quotas based on the reference production of the undertaking concerned and by the application to that production of certain abatement rates. Article 4 (3) of the aforementioned decision provides that: According to Article 4 (5) the Commission, in order to take account of restructuring, is to increase the reference production figures so as to reach the total equivalent to the production of the corresponding quarter of 1974:

“... if during the period from July 1977 to June 1980, the average rate of utilization of the production facilities of an undertaking was 10 percentage points or more below the average rate of utilization of the same facilities of the other undertakings of the Community, during the years 1977, 1978, and 1979, the Commission shall increase the reference production figures for this undertaking to a level which corresponds to a rate of utilization which lies five percentage points below that average rate in the other undertakings :

provided the undertaking undertook to comply from July 1977 to June 1980 with the delivery programmes established by the Commission, and

provided the programme for this enterprise was fixed taking 1974 as a. basis, and

provided that during that year all or part of the undertaking's facilities were not on stream.”

“where an undertaking's total production of the four groups of products during a reference period falls short of production in the same quarter of 1974, and

where this undertaking has achieved for the year ending in 1979 a profit which is, shown in its annual report or reported to the national official agency responsible for the filing of the annual accounts of companies.”

b) Since towards the middle of 1981 the European steel industry was still experiencing a period of manifest crisis, the Commission introduced by means of Decision No 1831/81/ECSC of 24 June 1981 (Official Journal 1981, L 180, p. 1), as amended by Decision No 1832/81/ECSC of 3 July 1981 (Official Journal 1981, L 184, p. 1), by Decision No 2804/81/ECSC of 23 September 1981 (Official Journal 1981, L 278, p. 1) and by Decision No 553/82/ECSC of 3 March 1982 (Official Journal 1982, L 65, p. 6), a new system of production quotas for certain products for undertakings in the steel industry which was also based on Articles 47 and 58 of the ECSC Treaty and which as to apply from 1 July 1981 to 30 June 1982. Article 5 of Decision No 1831/81 provides that the Commission is to fix each quarter for each undertaking its production quotas and the part of such quotas which may be delivered in the Common Market, on the basis of the reference production and reference quantities of the undertakings in question and by application of certain abatement rates to such production and quantities. Article 6 of the decision, as amended by Article 1 (4) of Decision No 1832/81, provides that: In addition Article 14 of Decision No 1831/81, as amended by Article 1 (8) of Decision No 1832/81, provides that:

“Subject to the provisions of Article 7 (2), the reference production of products in Categories la, lb, Ic and Id of undertakings producing hot-rolled wide and narrow strip shall be calculated on the basis of the reference production for Category I as defined in Article 1 for all qualities and choices of steel, except for products in this Category intended for the manufacture of the excluded products described in the first and second indents of Article 4 (2)”.

“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 shall make suitable adjustments to the reference production for the categories in question, provided that the undertaking has made an application to this effect during the first month of the relevant quarter in the following instances:

the total reference production for Categories la to Id comes to less than 1000000 tonnes a year and at least 75% of the figures are based on products having an abatement rate of more than 20%, or

the total reference production for Categories V and VI comes to less than 60000 tonnes and the abatement rate exceeds 20%.”

2. Outline of the facts

By letters of 16 March 1982 and 22 June 1982, sent for the purposes of Article 36 of the ECSC Treaty, the Commission complained that Busseni had exceeded its production quota for the third quarter of 1981 in respect of products of Categories V and VI by 3125 tonnes, its production quota for the fourth quarter of 1981 in respect of products of Categories V and VI by 6079 tonnes and the part of its quota which it might dispose of in the Common Market in the fourth quarter of 1981 by 6565 tonnes. Busseni replied by telex message of 13 May 1982 and by letter of 29 June 1982, recalling the statements which its representatives had made in the course of a previous hearing relating to other breaches without, however, requesting a further hearing. It did not deny that it had exceeded the quotas but argued that its action was justified on the ground of its substantial financial and social liabilities. As the Commission regarded Busseni's arguments as inadequate it imposed on it a fine of 958084 ECU (or LIT 1280536751) by decision of 24 March 1983.

In the meantime Busseni came under the Cassa Integrazione Guadagni [income supplement fund] under Italian Law No 675 of 12 August 1977 and was therefore subject to amministrazione controüata [court-supervised management procedure]. On 23 April 1982 the Tribunale [District Court] of Brescia ordered the commencement of the court-supervised management procedure in respect of Busseni.

II — Written procedure and conclusions of the parties

Busseni instituted these proceedings by an application under Article 36 of the ECSC Treaty which was registered at the Court on 9 May 1983.

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. However, the Court requested the applicant to reply in writing before 19 March 1984 to the question set out below.

By order of 29 February 1984 the Court assigned the case to the Second Chamber.

The applicant claims that the Court should:

“After issuing such directions as may be appropriate and, as an interim measure, suspending the operation of the contested decision, declare void Decision No C (83) 376/9 of the Commission of the European Communities of 24 March 1983; In the alternative, reduce the fines imposed by that decision; In the further alternative, extend the periods within which the fines must be paid and make all requisite orders in that regard.”

The Commission contends that the Court should:

“(a) As a preliminary step, declare the application to have the operation of the decision suspended inadmissible; (b) With regard to the substance of the case, dismiss the application; Order the applicant to pay the costs.”

III — Submissions and arguments of the parties

Ih its application the applicant submits first that it was in fact impossible for it to comply with the quotas allocated to it by the Commission for the third and fourth quarters of 1981. A further reduction of its production would have prevented it from meeting the normal deadlines for payment in the course of the management of its production, from meeting its liabilities under a voluntary settlement signed in 1978 and from paying social contributions. The undertaking had, in fact, experienced a period of severe difficulty marked in 1977 by substantial debts amounting to approximately LIT 19000 million, by large-scale recourse to the Cassa Integrazione Guadagni, and by a considerable reduction in staff which resulted in 1978 in the conclusion of the aforementioned voluntary settlement and finally in the imposition of a court-supervised management procedure by the Tribunale of Brescia. During that period it reduced its steel production from 121804 tonnes in 1976 to 74446 tonnes in 1981, a drastic cut in the amount of steel produced which is corroborated by the reduction in its energy consumption.

The applicant's second submission is that it experienced exceptional difficulties which should have led the Commission to examine its case without delay under Article 14 of Decision No 1832/81 and to adjust its reference production on the basis thereof. In the absence of such adjustment no blame can be attached to it for exceeding its quotas since it was unable to comply with them without accelerating and exacerbating its economic and financial difficulties. It had thus been “absolutely impossible to act in any other way”.

Thirdly, the applicant submits that the fine is unjust and should also be set aside on the ground that the Commission failed to apply in favour of the applicant Article 4 (5) of Decision No 2794/80, which was restated in Article 6 of Decision No 1831/81 in the amended form laid down in Decision No 1832/81.

The Commission was under a duty to apply that provision and increase the reference production figure so as to reach the total equivalent to the production of the corresponding quarter of 1974. During that year the production in respect of which ECSC levies were imposed amounted to approximately 180000 tonnes, whereas the average for the three reference years was less than 120000 tonnes. Consequently the Commission should have taken the average of the three years from 1977 to 1979 inclusive as the reference quota.

Finally the applicant observes that enforcement of the fine would cause it grave difficulties which would prevent it from emerging form the court-supervised management procedure with any assets.

In its statement of defence the Commission raises an objection of inadmissibility with regard to the preliminary claim that the operation of the contested decision should be suspended. According to the Commission that application should have been made in compliance with Article 83 (3) of the Rules of Procedure by a separate document and in accordance with the provisions of Articles 37 and 38 of those rules and should not have been included in the main application.

With regard to the submission concerning the Commission's failure to apply Article 14 of Decision No 1832/81 the Commission contends that that provision was not applicable in this case because Busseni's production of products falling within Categories V and VI was 74000 tonnes whereas the provision invoked by the applicant requires the annual reference production of the undertaking concerned to be less than 60000. Moreover the applicant's communications in April and May 1981 contained no reference to Article 14 and it was only much later in a telex message of 9 December 1981 and in a letter of 17 December 1981 — too late — that the applicant referred to that provision.

With regard to the applicant's third submission the Commission observes first that Article 6 of Decision No 1831/81 is certainly not a restatement of Article 4 (5) of Decision No 2794/80. Moreover, the applicant did not fulfil one of the conditions, namely that the undertaking must have achieved for the year ending in 1979 a profit which is shown in its annual report. All that the applicant produced, however, was its tax return for 1979. The tax return bears no relationship to the annual report (company balance sheet), the only document which shows whether a company has actually made a profit.Thus despite what may be contained in the tax return a company's balance sheet may indicate a loss. That was precisely so in the case of Busseni, whose balance sheet for 1979 showed a loss for the year of LIT 11837406. Furthermore, the applicant did not request application of the aforementioned provision until 2 February 1983 when Decision Ņo 2794/80 was no longer in force, and it failed to reply to the Commission's request of 18 February 1982 for production of the balance sheet for 1979. The Commission therefore concludes that the submission should be rejected.

With regard to the submission that the fine is unjust not only in principle but also in relation to the amount thereof, the Commission maintains that the submission should be rejected for the same reasons as the preceding submission. Finally it observes that it has always granted undertakings which could prove that they were experiencing financial difficulties an extension of the period for paying the fine.

In its reply the applicant reiterates that in 1974 its production was close to 180000 tonnes and in 1976 more than 120000 tonnes, and that that level fell dramatically as a result of the crisisexperienced by the undertaking to 42256 tonnes, although it subsequently increased to 59400 tonnes in 1978 aid 76066 tonnes in 1979. In view of those figures the applicant was entitled to be allocated different reference quotas under Article 4 (3) and (5) of Decision No 2794/80. If the reference quotas fixed by the Commission were correct, by contrast, the undertaking would be forced to close on the ground that the rate of utilization of its facilities was between 20% and 25%, which was lar below the average rate and would make the operation of the business unprofitable.

With regard to the question whether the undertaking made a profit in 1979 the applicant observes that although its financial statement indicated a loss of LIT 11837406 there was in fact a profit of LIT 414460000 in respect of which it paid local income tax to the public authorities. In compliance with the provisions relating to corporate tax it took into account in drawing up the financial statement for 1979 a debit item amounting to LIT 62169000 as local income tax for 1979 when in fact the payment for that year was not made until after 31 December 1979. Of the sum of LIT 414460000 chargeable to local income tax for 1979 LIT 364128496 was used to cover previous liabilities, which left a disposable profit for that year of LIT 50331504. It was therefore incorrect to say that the company made a loss in 1979.

In its rejoinder the Commission objects that the applicant cannot request the application of Article 4 (3) and (5) of Decision No 2794/80 in this action since it did not make an appropriate request at the time the decision was in force. In the first place the applicant's assertions with regard to its production in 1974 and 1976 are contradicted by its statements to the department concerned with ECSC levies, according to which its production of iron bars amounted to 89200 tonnes in 1974 and to 94146 tonnes in 1976, in addition to its production of crude steel which is not the subject of this action.

In the second place, with regard to the application of Article 4 (3) of Decision No 2794/80, the applicant did not submit any information concerning its capacity from 1977 to 1980. It was therefore impossible to know whether the rate of utilization of its production facilitites was 10 percentage points or more below the average rate of utilization of the other undertakings of the Community. Moreover, Busseni does not fulfil any of the requirements laid down in Article 4 (3).

In the third place, the Commission emphasizes the fact that the financial statement for 1979 indicates a, loss for that year of more than LIT 11000000. Furthermore, the statement was forwarded to the Commission on 12 April 1983, that is to say, after it had been decided to impose a fine.

In addition, if the applicant considered that the quotas were unfairly allocated it should have challenged them before the Court; since it failed to do so in due time it is precluded henceforth from doing so.

IV — Reply to the question put by the Court

The Court requested the applicant to provide it with further information regarding the manner in which it had requested the Commission to apply Article 14 of Commission Decision No 1832/81. The applicant has failed to respond to that request.

V — Oral procedure

At the sitting on 5 April 1984 oral argument was presented by the applicant, represented by F. Massoni, Avvocato, and by the Commission òf the European Communities, represented by Sergio Fabro, acting as Agent.

The Advocate General delivered his opinion at the sitting on 30 May 1984.

Decision

1. By application lodged at the Court Registry on 9 May 1983 Acciaierie e Ferriere Busseni SpA (hereinafter referred to as “the applicant”), an undertaking having its registered office at Nave (Italy), brought an action under the second paragraph of Article 36 of the ECSC Treaty challenging the individual decision of the Commission, Decision No C(83) 376/9 o t 24 March 1983, which imposed a fine on it under Article 58 of the LCbL, Treaty and under Article 12 of the general decision of the Commission, Decision No 1831/81/ECSC of 24 June 1981 establishing for undertakings in the iron and steel industry a monitoring system and a new system ol production quotas in respect of certain products (Official Journal 1981, L 180, p. 1), as amended inter alia by Decision No 1832/81/ECSC of 3 īulv 1981 (Official Journal 1981, L 184, p. 1).

2. The contested decision states that in breach of the aforementioned Decision No 1831/81 the applicant exceeded by 3125 tonnes the production quota of 12975 tonnes allocated to it for the third quarter of 1981 in respect of products falling within Categories V and VI, by 6079 tonnes the production quota of 14087 tonnes allocated to it for the fourth quarter of 1981 in respect of products falling within Categories V and VI and by 6565 tonnes the part of its quota of 12914 tonnes which could be delivered in the common market in the fourth quarter of 1981.

3. In the decision the Commission declared that the applicant's production exceeded by more than 10% the production quotas and the part of the quota which could be delivered in the Common Market and that the applicant had already exceeded its production quota, in respect of products falling within Categories V and VI during the third quarter of 1981, and it imposed pursuant to the second paragraph of Article 12 of the aforementioned Decision No 1831/81 a fine which was 10% above the normal rate, that is to say a fine of ECU 82.5 for each tonne in excess of the quota in respect of the third quarter of 1981 and a fine which was twice that amount above the normal rate, that is to say a fine of ECU 90 for each tonne in excess of the quota in respect of the fourth quarter of 1981. The total fine therefore amounted to 958084 ECU (or LIT 1280536751) and was to be paid within two months of notification of the contested decision.

4. The quotas were allocated to the applicant by individual decisions adopted by the Commission on 6 August 1981 in respect of the third quarter of 1981 and on 26 October 1981 in respect of the fourth quarter of 1981 pursuant to Article 58 of the ECŞC Treaty and the aforementioned Decision No 1831/81 and were notified to it, together with its reference production figures, by letters of the same dates.

5. It is common ground that the applicant did not institute proceedings before the Court for a declaration that the said individual decisions were void within the period laid down by Article 33 of the ECSC Treaty.

6. By this action the applicant, whilst not disputing that it has in fact exceeded its quotas as the Commission alleges, seeks primarily a declaration that the contested decision fixing the fine is void and in the alternative a reduction of the fine, or in the further alternative an extension of the period within which the fine must be paid. In support of its application the applicant puts forward three submissions based on exceptional difficulties within the meaning of Article 14 of Decision No 1831/81, infringement by the Commission of Article 4 of Decision No 1794/80, and the principle of necessity.

The claim that the contested decision imposing a fine should be declared void

7. The applicant maintains in its first submission that it was in fact impossible for it to comply with the quotas allocated to it because it was experiencing exceptional economic and financial difficulties which should have led the Commission to adjust its reference production under Article 14 of Decision No 1831/81, as amended by Article 1 (8) of Decision No 1832/81.

8. In support of that contention the applicant states that it experienced a period of severe difficulty marked in 1977 by substantial debts amounting to approximately LIT 19000 million, by a reduction of the workforce from 269 to 150 persons and by large-scale recourse to the Cassa Integrazione Guadagni [income supplement fund], which resulted in 1978 in the conclusion of an out-of-court settlement and finally, in 1982, in the imposition of a court-supervised management procedure by the Tribunale [District Court] of Brescia. During that period it cut its steel production drastically from 121804 tonnes in 1976 to 74446 tonnes in 1981 (invoiced tonnage).

9. The applicant maintains further, in its second submission, that the fine infringes Article 4 of Commission Decision No 2794/80 of 31 October 1980 (Official Journal 1980, L 291, p. 1), which it alleged was restated in Article 6 of Decision No 1832/81, inasmuch as the Commission failed to increase its reference production figures pursuant to Article 4 (3) and (5) either “to a level which corresponds to a rate of utilization which lies 5 percentage points below (the average rate of utilization of the same facilities of the other undertakings of the Community during the years 1977, 1978 and 1979)” or “so as to reach the total equivalent to the production of the corresponding quarter of 1974”.

10. In support of that submission the applicant states that in 1974 the production in respect of which ECSC levies were imposed amounted to approximately 180000 tonnes, whereas the average for the three reference years from 1977 to 1979 was less than 120000 tonnes. The rate of utilization of its facilities was thus between 20% and 25% and therefore below the general average. It adds that in the financial year ending in 1979 it realized a declared profit of LIT 414460000 in respect of which it paid local income tax to the public authorities even though the financial statement showed liabilities of LIT 11837406.

11. Those two submissions of the applicant relate in fact not to the legality of the contested decision imposing a fine on it but to other individual decisions adopted by the Commission allocating production quotas to the applicant and to the Commission's failure to adopt an individual decision adjusting the applicant's production quota or increasing its reference production figures.

12. In that respect it must be recalled that it is well-established in the Court's case-law that an applicant may not, in the course of an action for the annulment of an individual decision under Article 33 of the ECSC Treaty, rely on the submission that another individual decision which was addressed to it and which has become final is unlawful.

13. Similarly, an applicant may not, in the course of such proceedings, rely on the fact that the Commission has not complied with its duty to adopt an individual decision if it has not brought an action before the Court challenging such a refusal to act, after having raised the matter with the Commission in accordance with Article 35 of the ECSC Treaty.

14. The Commission's individual decisions of 6 August and 26 October 1981 allocating production quotas to the applicant have become final since the applicant failed to bring an action before the Court in due time under either Article 33 or Article 35 of the ECSC Treaty.

15. Although the applicant sent various communications to the Commission explaining its economic position, and even if those communications could be regarded as requests pursuant to Article 14 of Decision No 1831/81, Article 4 of Decision No 2794/80 and Articles 35 (1) of the ECSC Treaty, the Court considers that it is unnecessary to examine them further because the applicant has, in any event failed to bring an action before the Court within the period of one month laid down by Article 35 (3) of the ECSC Treaty challenging the Commission's implied refusal to act.

16. In those circumstances the applicant may not usefully rely in this case on the alleged illegality of the individual decisions fixing quotas or parts of quotas for the third and fourth quarters of 1981; the submissions made by the applicant in that respect must therefore be rejected.

17. The applicant's third submission may be understood as meaning that it was forced to exceed the quotas allocated to it in order to preserve a minimum level of production by the undertaking so as to protect a vital legal interest, namely its very existence, and that it therefore acted under pressure of necessity.

18. It must be pointed out that the Court has consistently held that the argument of necessity cannot be entertained in relation to the quota system provided for by Article 58 of the ECSC Treaty, which is based on solidarity between all Community steel undertakings in the face of the manifest crisis in the steel industry and which seeks an equitable distribution of the detrimental effects of unavoidable economic circumstances (cf. especially the judgments of 16. 11. 1983 in Case 188/82 Thyssen [1983] ECR 3721, and of 14. 12. 1983 in Case 263/82 Klöckner [1983] ECR 4143).

19. Since that submission, too, cannot be upheld the claim that the contested decision should be declared void must be rejected.

The claim that the fine should be reduced

20. It is clear from the file that the third submission examined above relates not only to the claim that the contested decision should be declared void but also to the claim that the fine should be reduced.

21. The Court considers, however, that although the applicant maintained that payment of the fine imposed on it would cause it substantial financial difficulties and would prevent it from emerging from the court-supervised management procedure in a favourable position, such circumstances do not justify a reduction of the amount of the fine.

22. As the Court has consistently held (cf. judgments of 11. 5. 1983 in Joined Cases 303 and 312/81, Klöckner [1983] ECR 1507, 30. 11. 1983 in Case 235/82, Fernere San Carlo [1983] ECR 3949, and 1. 3. 1984 in Case 10/83, Metalgoi [1984] ECR (1271), the request that a fine be reduced cannot be justified on the ground that payment of a fine could lead to serious financial difficulties for the undertaking concerned. In that respect it has held that the system of production quotas would be gravely compromised if every undertaking were able, by pleading necessity due to serious economic difficulties, to excuse itself from observance of the restrictions and to exceed at will the production quota allocated to it. The chain reaction thereby released would culminate in the collapse of the system, so that Article 58 of the Treaty would become a dead letter.

23. Moreover, the aforementioned decisions have established that Article 58 of the Treaty does not require the Commission to guarantee for any undertaking, to the detriment of other Community undertakings, whatever minimum level of production that undertaking considers necessary according to its own criteria of profitability and development, or to ensure the survival of that undertaking.

24. It follows from the foregoing that the claim for a reduction in the amount of the fine must be rejected.

The claim that the Court should extend the period for payment of the fine by all appropriate measures

25. Claims of this sort amounting to a request that the Court issue instructions to the Commission, which alone has the power to grant terms of payment to undertakings which have been fined, are manifestly inadmissible.

Costs

26. Article 69 (2) of the Rules of Procedure provides that the unsuccessful party is to be ordered to pay the costs if they have been asked for. 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.