JUDGMENT OF 11. 10. 1984 — CASE 151/83 ALPA v COMMISSION
In Case 151/83
THE COURT (First Chamber) composed of: Lord Mackenzie Stuart, President, G. Bosco (President of Chamber) and T. Koopmans, Judges, Advocate General : Sir Gordon Slynn Registrar: H. A. Rühi, Principal Administrator
gives the following
JUDGMENT
Facts and Issues
I — Facts and written procedure
By registered letter of 26 May 1983 requiring acknowledgement of receipt, the Société Aciéries et Laminoirs de Paris (Alpa), hereinafter referred to as “Alpa”, applied to the Commission for the adjustments provided for by Article 14 of Decision No 1696/82/ECSC of 30 June 1982 (Official Journal, L 191, p. 1) for the second quarter of 1983.
By registered letter of 22 June 1983 requiring acknowledgement of receipt, the Commission replied to Alpa's letter and referred to an earlier letter of 5 April 1983 signed by Mr Davignon, a Member of the Commission, which had been written in reply to an application for quota adjustments dated 23 February 1983. Alpa claims that it never received the Commission's original letter.
In his letter of 5 April 1983, Mr Davignon acknowledges receipt of Alpa's letter of 23 February 1983 in which Alpa requested the Commission to treat Alpa as a distinct production centre in the Usinor group.
In that letter, Mr Davignon reminds Alpa that Article 2 (4) of Decision No 1696/82 of 30 June 1982 provides that: “For the purposes of this decision, any group of concentrated undertakings within the meaning of Article 66 of the Treaty shall be regarded as a single undertaking even if such undertakings are located in different Member States.” Moreover, Decision No 24/54 of the High Authority of the ECSC of 6 May 1954 (Official Journal, English Special Edition 1952-1958, p. 16) defines what is to be regarded as control of an undertaking for the purposes of Article 66 (1) of the ECSC Treaty. In his letter, Mr Davignon points out that Usinor holds 100% of Alpa's share capital, with the result that Alpa is in fact integrated within Usinor which is the sole recipient of the quotas allocated pursuant to Articles 5 and 9 (2) of Decision No 1696/82. There is no legal provision which permits Alpa to be treated as a distinct undertaking for the purposes of Article 58 of the ECSC Treaty. Accordingly, only Usinor is authorized to request the application of the provisions of Decision No 1696/82. However, the requirements for benefiting from Article 14 of that decision are not satisfied by Usinor because of its size.
Alpa brought an action against that letter by application lodged at the Court Registry on 25 July 1983. The written procedure followed the normal course. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to assign the case to the First Chamber without any preparatory inquiry.
II — Conclusions of the parties
The applicant claims that the Court should declare the individual decision notified to it on 22 June 1983 to be void.
The Commission contends that the Court should:
Dismiss as inadmissible the application for a declaration that the letter of 22 June 1983 is void;
In the alternative, dismiss the application as unfounded;
Order the applicant to pay the costs.
III — Submissions and arguments of the parties
Admissibility
The Commission considers that the application is inadmissible in its entirety. Mr Faure's letter of 22 June 1983 is not a decision. In its letter of 26 May 1983 the applicant requested the Commission to grant certain quota adjustments to Alpa as a distinct production centre. In the Commission's view, that letter constitutes a request to the Commission to take a policy decision amending Decision No 1696/82 or even to disregard the provisions thereof.
As far as Mr Davignon's reply is concerned, his letter is not in the form of a decision but is a personal letter from him to the Chairman and General Manager of Alpa. The letter is more in the nature of an “explanatory memorandum” (and therefore merely confirms the position). It explains the general provisions in force and refers to an individual decision which has already been adopted in relation to another undertaking and which has had legal effect (and which moreover was the subject-matter of an action brought by the undertaking to which it was addressed, Usinor, in Case 103/83). The Commission refers to the Court's judgments of 10 December 1957 in Joined Cases 1 and 14/57 Société des Usines à Tubes de la Sarre [1957 and 1958] ECR 105 at p. 114 and of 5 December 1963 in Joined Cases 53 and 54/63 Lemmerz-Werke [1963] ECR 239 at p. 248.
The Commission's conclusion in no way diminishes, in its view, the legal protection accorded to undertakings by the ECSC Treaty and in particular by Article 33 thereof, against an individual decision notifying the quotas allocated for the quarter in question.
The Commission considers the application to be inadmissible inasmuch as it is based on the alleged illegality of Articles 2 (4) and, possibly, of the third indent of Article 14 of the general Decision No 1696/82, as amended. The Commission takes the view that the letter of 22 June is not concerned with the application of either Article 2 (4) or the third indent of Article 14. The inapplicability of the third indent of Article 14 flows directly from Decision No 1696/82, whilst Article 2 (4) has already been the subject-matter of the individual decision of 27 April 1983 which was contested in Case 103/83. In that regard, the Commission refers to the judgment of the Court of 16 February 1982 in Case 258/80 Rumi [1982] ECR 487 at p. 502.
The applicant considers that it was able to submit the application forming the subject-matter of these proceedings only as a result of the adoption of the decision rejecting its application for quota adjustments which it received on 22 June 1983.
The applicant considers that the question of admissibility raised by the Commission is inextricably bound up with the substantive issue since the solution to that question lies in the decision to be given by the Court on the question whether Article 2 (4) of Decision No 1696/82 is lawful. Moreover, the applicant is the only undertaking forming part of the Usinor group which produces concrete reinforcing bars and both the decision allocating quotas and the contested decision refusing to adjust the reference production apply to Alpa alone. Since Alpa is the real addressee of those decisions it is justified in taking the view that they are of individual concern to it in its capacity as a legal person. By analogy with the provisions of the second paragraph of Article 173 of the EEC Treaty, the Commission's decisions relating to products in Category V are addressed to another legal person but are of direct and individual concern to Alpa. Moreover, those provisions are merely a more precise restatement of the provisions of the second paragraph of Article 33 of the ECSC Treaty.
The applicant also considers that the Commission's letter constitutes a decision. It refers to the judgment of the Court of 22 June 1983 in Case 317/82 Boëlv Commission [1983] ECR 2041, in which the Boel undertaking requested the Commission to apply Article 14. The Commission rejected pan of that request since it considered that the wording of the general decision ruled out the possibility of adjustment in respect of one of the products in question. If the Commission's reasoning in these proceedings is applied to that case, the refusal communicated to Boël was not a decision but merely a letter setting out certain information intended to notify the undertaking that Article 14 was not applicable to those circumstances. Nevertheless, the Commission did not raise an objection of inadmissibility in relation to the application for a declaration that the decision in question was void. The action brought by the applicant has the same purpose as that brought by Boël.
In its rejoinder, the Commission takes the view that the applicant has neither rebutted its arguments concerning the admissibility of the objections of illegality nor indicated which provisions of the general decision were applied by the Commission in its letter of 22 June 1983.
The Commission considers that it is unnecessary in these proceedings to decide whether the individual decision of 27 April 1983 allocating quotas to Usinor is addressed to the applicant since the applicant has not brought an action against it. The Commission emphasizes that the applicant's request must not be regarded as a request to apply Article 14 but as a request to disregard the provisions of Decision No 1696/82. According to that decision, the Commission must deal with the undertaking to which the individual decision establishing quotas was addressed. Only that undertaking may submit an application for adjustment. In this case, Usinor did not follow that procedure since it would never have been able to demonstrate that the Usinor group fulfils the requirements of Article 14.
The applicant's letter and the reply from Mr Faure, a Commission official, fall outside the field of application established by the general decision. The Commission was under no obligation to take à decision and did not therefore do so. If every individual wishing to challenge a general decision were able to bring an action against it, after receiving a reply from an officer of the Commission, Article 33, which provides that a general decision may be contested only in the event of a misuse of powers, would be rendered entirely nugatory.
In its letter of 22 June 1983, the Commission did not adopt a measure nor did it apply any provision of the general decision adversely affecting the applicant. The letter merely sets forth an opinion' expressed“ by” à“rT “officer” of ”the Commission which is confined to a description of the factual position.
The Commission points out that the situation in the Boël case was quite different. That case was concerned with an application for adjustment submitted by the undertaking to which the quotas had been allocated and the proceedings were confined to consideration of the submission alleging an infringement of Article 14. There is no contradiction between the Commission's position in the Boël case and its position in this case.
Substance
The applicant considers that it satisfies the requirements of the third indent of Article 14 of Decision No 1696/82, as amended, in so far as it manufactures only products in Category V for which the abatement rate exceeds 40% and total production of which did not exceed 700000 tonnes in 1981.
The Commission refused to consider granting the adjustment applied for by the applicant on the ground that Alpa was integrated within the Usinor group for the purposes of Article 58 of the ECSC Treaty.
The Commission referred to Article 2 (4) of Decision No 1696/82 which provides as follows: “For the purposes of this decision, any group of concentrated undertakings within the meaning of Article 66 of the Treaty shall be regarded as a single undertaking even if such undertakings are located in different Member States”. The Commission, also referred to Decision No 24/54 of the High Authority of the ECSC of 6 May 1954 which defines the concept of “control” of an undertaking pursuant to Article 66 of the Treaty.
The applicant considers that the individual decision notified to it is unlawful inasmuch as:
1) It is based on Article 2 (4) of Decision No 1696/82 and treats Alpa as a production centre integrated within the Usinor group;
2) It is based on the third indent of Article 14 of Decision No 1696/82 which rules out in general terms any possibility of adjustment for undertakings whose production exceeds a certain volume but does not define the concept of undertaking in relation to that possibility.
The applicant takes the view that the Commission, by borrowing the definitions which are used in the Treaty and the secondary legislation only in connection with agreements, decisions, concerted practices and concentrations, and applying them to the quota system, is guilty of a misuse of powers.
The applicant points to various provisions of the ECSC Treaty, general decisions of the Commission and judgments of the Court, which indicate in its view that the criterion adopted is that of the legal unit rather that the economic unit. Thus the penalties which may be imposed on undertakings in default are imposed on the undertaking itself and not on the owner thereof. In the case of the scrap equalization scheme, the Court approved the legal rather than the economic criterion by identifying the concept of undertaking, within the meaning of the Treaty, with the concept of a legal or natural person, on the ground that the Treaty availed itself essentially of that concept for the purpose of designating those on whom rights are conferred and duties are imposed under Community law.
The concept of concentrated undertakings, which the Commission has borrowed from Article 66 of the Treaty, is unlawful since it is used outside the field of application prescribed by the Treaty. It is also inappropriate since it is contrary to the objectives pursued by the Treaty and by the quota system.
The definition given by the Commission leads to discrimination against undertakings which have endeavoured to implement a restructuring plan. That is true in the case of the applicant, the orly undertaking forming part of the Usinor group which manufactures concrete reinforcing bars, after concentration of production of such bars in the applicant's factory. Alpa is a small modern undertaking located in the Paris region and advantageously situated for obtaining supplies of scrap and for selling concrete reinforcing bars in the region.
The definition in question also discriminates without any objective reason against integrated undertakings of the kind referred to in Article 66 in favour of independent undertakings. The applicant is an undertaking legally distinct from Usinor. It cannot manufacture any other product and cannot therefore benefit from transfers of production from one factory in the group to another. It is geographically isolated in the Paris region. Its employees cannot therefore be transferred to other factories in the group. Accordingly, it is confronted with social, financial and accounting problems identical to those of undertakings not integrated in a group.
The allocation of insufficient quotas means that the applicant is unable to satisfy all its customers, who are geographically concentrated within the Paris region. Its position on the French market has continued to deteriorate whilst the position of independent undertakings, in particular those from Italy, has steadily impoved.
The quotas allocated by the Commission no longer permit the minimum profitability threshold to be attained and have caused the applicant to sustain losses of FF 7600000 in the first quarter of 1983 and of FF 5766000 in the second quarter of 1983. The applicant is unable to provide for the depreciation of its plant and equipment or to cover its overheads and was obliged to shut down its factory for several weeks.
The Commission does not deny that Alpa is a concentrated undertaking within the Usinor group for the purposes of Article 66 of the Treaty. It acknowledges that Alpa is an undertaking within the meaning of Article 80 of the Treaty.
The question is whether Article 2 (4) of Regulation No 1696/82 which provides that “for the purposes of this decision, any group of concentrated undertakings ... shall be regarded as a single undertaking ...” is unlawful.
The Commission recalls that the Treaty confers on the Commission a wide margin of discretion with regard to the adjustment of the system of production quotas. The Commission is required to exercise objectively and without discrimination the power conferred upon it by Article 58 of the ECSC Treaty. For the proper application of the quota system, the criterion according to which the quota system also applies to a group of concentrated undertakings of the kind referred to in Article 66 of the ECSC Treaty is objective and appropriate.
The characteristic feature of a concentration of undertakings is that one or more undertakings are controlled by another undertaking. The existence of control implies the possibility of influencing the decisions of another undertaking in industrial and commercial matters. It is necessary, in order to ensure that the quota system operates effectively, to apply the system to the person with power to determine the undertaking's production operations.
If production quotas were allocated to every individual undertaking, the rights of an undertaking which has acquired control over a concentration of undertakings would be called in question and the principle embodied in Article 66 of the ECSC Treaty to the effect that concentrations of undertakings are lawful would be contravened. A production quota fixed for a group of undertakings as a whole renders the system more flexible. Production over the reference period is calculated as a whole for the undertakings forming part of the group. The group may, however, if it wishes, divide between the various undertakings the production quotas fixed. A group thus enjoys a substantial advantage over a single undertaking which merely has the option of adjusting or increasing, by exchange or by purchase, the quotas allocated to it. Decision No 1696/82 therefore takes account of the fundamental objective which the creation of a concentration of undertakings is intended to achieve, namely the rationalization of operations as a result of specialization within the group.
A group of concentrated undertakings is no different from an undertaking which constitutes a single legal person but possesses several production establishments. The system adopted by the public authorities must take account of genuine economic structures and operations. The purpose of the quota system is to determine the structure and the volume of production in the future, by reference to the structure and the volume of production recorded in the past. For a group of concentrated undertakings of the kind referred to in Article 66 of the ECSC Treaty, production recorded over the reference period is the result of decisions adopted in connection with the unity of the consortium and in the light of the interests thereof.
The Commission points out that if Alpa's reasoning were taken to its logical conclusion and Article 2 (4) were repealed, and if the other provisions of the decisions in question were to remain unchanged, the applicant's quotas might be much smaller (approximately 55% of existing quotas) in the.light of its contribution to the best months of production which are used as a basis for the calculation of the reference production. Even if the applicant satisfied the requirements for an increase under the third indent of Article 14, the increase would have been small, since such adjustments have never exceeded the equivalent of a 5% decrease in the abatement rate in question.
The Commission denies the applicant's contention that it has discriminated between integrated undertakings and independent undertakings. A group of concentrated undertakings is no different from a single undertaking possessing several production establishments. In both cases, the nature and the volume of production are the result of a concerted and therefore uniform industrial and commercial policy. Both types of organization must be accorded equal treatment at law since they both are in the same position as regards the effects of the quota system on the planning of production. To select as a criterion the form of organization takes no account of reality, is arbitrary and discriminates against a single undertaking possessing several production units.
The Commission considers it impossible to take the view that the manner in which Alpa is managed is uninfluenced by the fact that it forms part of the Usinor group. Alpa's contention to the effect that it cannot benefit from transfers of production from one factory to another is contradicted by the statement on page 11 of the application to the effect that transfers of production to the applicant from other factories of the Usinor group have already taken place.
Even if Article 14 were applicable, the Commission doubts whether Alpa would be able to plead exceptional difficulties. The quotas allocated to Usinor in the second quarter of 1983 enabled Alpa to use its production capacity to a considerable extent (65.8%) and in its judgment of 11 May 1983 in Case 244/81 Klöckner v Commission [1983] ECR 1451, the Court held in paragraph 27 of its decision that Article 58 in no way places the Commission under a duty to guarantee to any given undertaking such minimum production as that undertaking regards as appropriate in accordance with its own criteria of profitability. Finally, the Commission denies the applicant's contention to the effect that the Commission has been guilty of a misuse of powers. To prove a misuse of powers the applicant must demonstrate that the decision in fact pursues an objective other than that for the purposes of which the High Authority is entitled to act (judgment of the Court of 12. 6. 1958 in Case 15/57 Compagnie des Hauts Fourneaux de Chasse v High Authority [1957 and 1958] ECR 211).
In its reply, the applicant emphasizes that it is the effect of Article 2 (4) in conjunction with the third indent of Article 14 which gives rise to the discrimination of which it complains. Moreover, such discrimination may be eliminated in two ways, either by recognizing the applicant's status as an independent undertaking to which individual quotas are allocated, or by not ruling out a priori any right of adjustment in the case of an undertaking which produces concrete reinforcing bars and is integrated in a group, where that undertaking was the only one within that group to produce concrete reinforcing bars and satisfied all the other requirements laid down in the third indent of Article 14.
The information supplied by the Commission, to the effect that a group of undertakings enjoys greater flexibility as regards the division amongst the undertakings forming part of the group of the quotas allocated to it, may be correct in certain cases but is incorrect in others. The undifferentiated application to dissimilar situations of a single exclusively legal criterion, stems from an all-embracing, technocratic vision of the system. The Commission is reversing the order of the obligations incumbent upon it as regards the organization of the quota system. Its first duty is to restore a proper balance to the market and its second duty is to ensure compliance with the quotas, but the Commission's intervention seems to be dictated first and foremost by the requirements of control, which is not an end in itself.
Alpa is completely independent in relation to the parent company. The quota system must be adapted to the actual state of the market, in terms of objective economic information relating to the market and to each undertaking. The Commission must provide for the adjustment of an establishment's references where it operates under economic conditions similar to those of an independent undertaking.
The applicant also points out that it has derived no benefit from the fact that a quota was allocated to Usinor. Quotas were allocated to the Usinor group in respect of products in Category V on the basis of the group's past references. The applicant refers to certain figures to demonstrate that the calculation of the reference production takes account of periods in which the volume of production of the other centres engaged in the manufacture of concrete reinforcing bars declined and ultimately compelled them to shut down completely. The restructuring operation carried out by the group severely penalized the applicant since its volume of production was reduced by a factor of 2V2 and it was therefore unable to provide for depreciation of the rationalization and modernization costs which it incurred in accordance with the objectives of the Treaty and of the restructuring programme.
In the applicant's view the effect of the system established by the Commission is that two undertakings operating under similar conditions are differently treated. The grant of adjustments to small-sized independent undertakings and the refusal to extend that possibility to integrated undertakings, which are operated under the same conditions as an independent undertaking, inevitably leads to structurai changes in the sector in question. With the benefit of quota adjustments, small independent undertakings conclude contracts which integrated undertakings are unable to perform since they lack adequate quotas, and they increase their production to the detriment of competing undertakings. Usinor/Alpa's share of the French market declined from 27.7% in 1974 to 13.5% in 1982, whereas the Italian undertakings' share increased from 3.5% in 1974 to 24.2% in 1982.
According to the case-law of the Court, the Commission must apply Article 58 of the ECSC Treaty impartially in relation to competition and must not accord preferential treatment to certain undertakings as against others whose position on the market is similar to theirs. Modernization and restructuring measures should confer an advantage on the undertakings which have adopted them and should not penalize them. Rules derogating from the general system of quotas must be formulated by reference to the general objectives of the Treaty.
The Court of Justice has upheld the validity of the system of calculating quotas on the basis of the reference production, since it took the view that the system did not affect the structure of the market. In the Court's view: “That criterion ... enables total production to be reduced without altering the positions of the undertakings on the market as between each other” (judgments of 3. 3. 1982 in Case 14/81 Alpha Steel [1982] ECR 749 and of 16. 2. 1982 in Joined Cases 39, 43, 85 and 88/81 Halyvourgiki [1982] ECR 593).
Even though the Court upheld the legality of Article 14 of Decision No 2794/80, which provided for an exception enabling the Commission in individual cases to adjust an undertaking's quota on equitable grounds and in cases of exceptional difficulty at the request of the undertaking concerned (judgment of 3. 3. 1982 in Case 14/81 Alpha Steel, cited above), the version of Article 14 in force at the time did not rule out altogether the possibility of adjustment in the case of an entire group of integrated or excessively large undertakings.
The Commission consciously decided that the sacrifices resulting from the reduction of aggregate production were to be borne by certain undertakings and not by others, for no objective reason other than the size of the former.
The applicant emphasizes that an adjustment of the share of the quota possessed by certain undertakings leads to a correlative reduction of the share of others. That deflection of production is clearly apparent from a table annexed to the reply, from the market forecasts published and from the division of the quotas allocated. Following the adjustments effected by the Commission, the share of the aggregate quota allocated to Usinor for the first quarter of 1983 was reduced from 2.47% of the provisional quota to 2.33% of the definitive quota. Usinor's share of the aggregate quota for products in Category V has steadily declined in each quarter as a result of the allocation of additional quotas to unintegrated competing undertakings, as is clear from the table set out in Annex V. It fell from 2.88% in the fourth quarter of 1981 to 2.33% in the first quarter of 1983.
If the definitive aggregate quota had been equitably divided amongst the undertakings producing concrete reinforcing bars and operating under the same conditions, the applicant would have been granted an adjustment in order to bring the reduction of its volume of production as regards Category V products closer to the total average reduction for all ECSC undertakings.
In its rejoinder the Commission points to what, in its view, is a contradiction in the arguments put forward by the applicant. The applicant seems on the one hand to wish to take advantage of the possibility of adjustment provided for in the third indent of Article 14 and thus does not contest the legality of that provision. On the other hand, in its application the applicant claims that the same provision is unlawful because of the production limit of 700000 tonnes provided for therein. That contradiction emerges once again in the applicant's reply in which the applicant states that either Alpa must be recognized as an undertaking for the purposes of the system — in breach of Article 2 (4) — to enable it to take advantage of the third indent of Article 14, or that the production limit of 700000 provided for by Article 14 must be repealed in order to enable the Usinor group to benefit therefrom. Those two arguments, which are contradictory, must in the Commission's view be regarded as alternatives to each other since they are mutually incompatible.
Moreover, the Commission denies that it applied an exclusively legal criterion when it adopted Article 2 (4). It contends that it is Usinor which favours the adoption by the Commission of an exclusively “legal” rule involving the allocation of individual quotas to each undertaking within the meaning of Article 80 of the ECSC Treaty. It follows from that argument that the allocation of quotas and any adjustments thereto would depend purely and simply on the legal form in which the undertaking in question is constituted. If Alpa were a separate undertaking, whilst forming part of a group, it would be allocated separate quotas and adjustments. If an entity similar to Alpa were merely a separate factory, forming part of a single legal entity, it would not be allocated separate quotas.
The Commission also rejects the view that Usinor, the parent undertaking, lacks the flexibility needed to manage of a group. For example, the Commission refers to the fact that in the fourth quarter of 1981 Usinor took advantage of the fact that the group did not exhaust the quotas allocated to it for products in Categories la and VI, which are not manufactured by Alpa, in order to reduce an excess of 2211 tonnes over the production quota for Category V to only 335 tonnes.
As regards the applicant's objection that its reference production is calculated in a manner which is disadvantageous to the Usinor group, the Commission points out that the rules for the calculation of quotas were introduced essentially by the first general decision, No 2794/80/ECSC. The application in this case is not concerned with the quota system established by that regulation and if the applicant had any objections to that system, Alpa, or rather Usinor, could simply have brought an action against it. It was not in Usinor's interests to do so before since the group had taken full advantage of the flexibility provided by the systems concerned.
However, the Commission also points out that the purpose of the quota system is not to enable the undertakings concerned to use their plant and equipment profitably. In that regard, the Commission refers to the judgment of the Court of 11 May 1983 in Case 244/81 Klockner, and in particular to paragraph 27 of the decision (cited above).
The Comnmission also contends that the third indent of Article 14 of Decision No 1696/82 is lawful.
First, the Commission analyses market trends the effect of which was to place at a disadvantage undertakings known as single-product undertakings manufacturing concrete reinforcing bars from scrap by converting it directly into liquid steel in electric furnaces. That process is unsuitable for manufacturing all other iron and steel products.
The Commission maintains that the reduced abatement rates, applied to small and medium-sized-single product undertakings by Decision No 533/82 were nondiscriminatory and proportionate to the objective of giving all undertakings a chance of survival. Unequal treatment does not constitute discrimination since the situations involved are not comparable, from the point of view of the size of the undertaking, the structure of production and the effects of the system of production quotas.
As regards the objection that the adjustments granted to competing undertakings altered certain market structures, it is probable that the structure of the market in concrete reinforcing bars would have changed far more markedly in the absence of a quota system than has been the case as a result of that system. If the market had been completely free, the share of the market possessed by independent producers with electric steel mills would have increased at an even faster rate in view of their lower costs.
The Commission also refers to figures relating to the production of concrete reinforcing bars between 1980 and 1982 which show that Italian production declined more sharply than both average production in the Community and Usinor's own production.
The Commission also points out that the differences between the forward programmes and the definitive programmes published by it stem from the adjustments of the reference production referred to in Articles 5 and 9 (2) or in Article 15 of Decision No 1696/82 and not from the adjustments of quotas granted pursuant to the third indent of Article 14. Adjustments in the latter case accounted for a mere 40691 tonnes out of a total of 1710000 tonnes. The Commission also questions the relevance of the applicant's remarks concerning the adjustments granted in respect of previous quarters and the nationality of the undertakings which benefited from such adjustments. In any event, the undertakings benefiting from adjustments granted pursuant to the third indent of Article 14 in the second quarter of 1983 are situated in four of the ten Member States, including France.
Finally, the Commission observes that the Usinor group obtained quota adjustments under Article 14 of Decision No 2794/80 which led to an increase in its references for Category V under the system established by Decision No 1696/82 and that Usinor's capacity utilization rate is 65.8%, whilst the average for its competitors is 42.5%. Accordingly, the applicant cannot rely on the existence of exceptional difficulties resulting from the quota system.
IV — Oral procedure
At the sitting on 23 February 1984 oral argument was presented by L. Funck-Brentano, for Alpa, and by F. Benyon, for the Commission of the European Communities.
The Advocate General delivered his opinion at the sitting on 5 April 1984.
Decision
1. By application lodged at the Court Registry on 25 July 1983, Société Aciéries et Laminoirs de Paris (Alpa) (hereinafter referred to as “Alpa”) brought an action under Article 33 of the ECSC Treaty for a declaration that the Commission decision notified to Alpa by letter of 22 June 1983 refusing to regard the applicant as an undertaking for the purposes of the system of production quotas and rejecting on that ground an application by Alpa for the adjustment of its production quotas is void.
2. Article 14 of Decision No 1696/82/ECSC (Official Journal, L 191, p. 1), as amended by Decision No 2751/82/ECSC of 6 October 1982 (Official Journal, L 291, p. 8), provides that undertakings may apply for an adjustment of their quota in respect of products in Category V if, inter alia, total production of the products listed in Article 1 did not exceed 700000 tonnes in 1981 and production in Categories IV, V and VI represents a substantial proportion of the total production of the undertaking in question.
3. In that regard it is common ground that the Usinor group, whose production is in excess of 700000 tonnes, was unable to qualify for an adjustment of its reference production for products in Category V. Its subsidiary Alpa on the other hand considered that it satisfied all the requirements of Article 14 and therefore by registered letter of 26 May 1983 it requested the application of that provision. The Commission however refused to accede to that request on the ground that Alpa was a concentrated undertaking within the Usinor group, that quotas were allocated to Usinor alone and that, consequently, only Usinor was. authorized to request the application of the provisions of Decision No 1696/82.
4. In these proceedings the applicant seeks a declaration that the abovementioned Commission decision, which was notified to it on 22 June 1983, is void.
5. According to the applicant, the Commission incorrectly applied Article 2 (4) of Decision No 1696/82 of 30 June 1982 which provides that for the purposes of this decision, any group of concentrated undertakings within the meaning of Article 66 of the Treaty shall be regarded as a single undertaking ...‘’
6. The applicant is a wholly-owned subsidiary of Usinor, although it has legal personality under French law. It is the only undertaking in the Usinor group to manufacture products in Category V (concrete reinforcing bars).
7. The applicant claims that the Commission should, when considering applications for the adjustment of quotas under Article 14 of Decision No 1696/82, take account of the individual position of each undertaking forming part of the group and not of the whole group of concentrated undertakings, as referred to in Article 66 of the ECSC Treaty.
Admissibility of the application.
8. The Commission contests the admissibility of the application on the ground that the letter of 22 June 1983 does not constitute a decision against which an action for a declaration of nullity may be brought but rather an explanatory memorandum stating the reason for which Alpa's request could not be granted. Furthermore, the application is inadmissible, in the Commission's view, in so far as it is based on the contention that Articles 2 (4) and 14 of the general decision are unlawful, since the Commission's letter of 22 June 1983 is not concerned with the application of either of those two provisions.
9. Those arguments must be rejected. It is indisputable that in its letter of 22 June 1983 the Commission in fact stated its position with regard to the applicant's request that Article 14 of Decision No 1696/82 be applied to it. It is also true, as the Court held in its judgment of 28 October 1981 in Joined Cases 275/80 and 24/81 Krupp v Commission [1981] ECR 2489, that although in an action for a declaration that an individual decision is void the applicant may allege that certain provisions of the general decisions which the contested decision implements are illegal, the applicant may do so only if the individual decision is based on the rules alleged to be illegal. In the present case, however, it is undeniable that the individual decision in respect of which the applicant seeks a declaration of nullity is based, at least in part, on the contested provisions of the general decision.
10. The application is therefore admissible.
Substance
11. The applicant contends that the contested decision must be declared void in so far as it is based on two unlawful provisions, namely Article 2 (4) of Decision No 1696/82 which wrongly permits a subsidiary to be assimilated to the.group of which it forms part, and Article 14 of the same decision which, by providing in the case of concentrated undertakings for the possibility of quota adjustments only for the group itself, discriminates between undertakings forming part of such a group and independent undertakings.
12. The applicant therefore calls in question in the first place the legality of Article 2 (4) of Decision No 1696/82 on the ground that the Commission is not authorized to take as a basis in connection with situations other than those listed in Article 66 of the ECSC Treaty the definition of a group of undertakings which is used in the Treaty in relation to the rules on mergers and concentrations, or consequently to disregard the definition of an undertaking contained in Article 80 of the ECSC Treaty. The applicant recalls that the concept of an undertaking within the meaning of the Treaty coincides with the concept of a natural or legal person (judgment of the Court of 22. 3. 1961 in Joined Cases 42 and 49/59 SNUPATv High Authority [1961] ECR 53).
13. That submission must be rejected. The Commission by deciding for practical reasons to allocate the quotas to the undertaking which directs the production operations in the group, has not exceeded the discretionary power conferred upon it by Article 58 of the ECSC Treaty since a method of that kind also enables the undertaking to subdivide the quotas within the group in a manner which is most conducive to the efficient management of production. Moreover, by thus selecting, as the entity to which the quota system is to be applied pursuant to Decision No 1696/82, a group of concentrated undertakings of the kind referred to in Article 66 of the ECSC Treaty, the Commission has in no way undermined the validity of the definition of an undertaking contained in Article 80 of the ECSC Treaty, as clarified in particular by the case-law of the Court, since neither the distinct legal personality of the undertakings forming part of the group nor their individual right to institute proceedings in matters concerning them is affected by such a decision.
14. Secondly, the applicant contends that the Commission should, in considering applications for quota adjustments submitted under Article 14 of Decision No 1696/82, take account of the individual position of each undertaking forming part of the group and not of the whole group of concentrated undertakings, as referred to in Article 66 of the ECSC Treaty. In the applicant's view, the system advocated by the Commission creates discrimination between integrated undertakings and independent undertakings. The system also penalizes undertakings which have adopted a restructuring programme, including the Usinor group whose share of the market has declined as against its competitors.
15. The applicant therefore considers that either it should be entitled to apply for an adjustment in the same way as an independent undertaking or that the production limit of 700000 tonnes provided for in Article 14 should be repealed in order to enable the Usinor group to benefit therefrom.
16. That submission also must be rejected. In so far as the Commission applied Article 2 (4) correctly when it fixed the total quota for the Usinor group, it was necessarily entitled to take account of the results of the group as a whole in deciding whether to refuse or to grant the quota adjustments applied for. In taking that approach, the Commission's sole aim was to accord identical treatment to groups of integrated undertakings in comparison with single undertakings possessing several production establishments.
17. Furthermore, the Commission is entitled in connection with the examination in individual cases of the need for adjustment of the reference production or the reference quantities of each undertaking pursuant to Article 14 of Decision No 1696/82, to draw a distinction between undertakings according to their size, by fixing a production limit for the purpose of defining undertakings which may benefit from the scheme in question. Small and medium-sized undertakings which manufacture exclusively products in Categories IV, V and VI may experience more serious difficulties in their efforts to survive in the present economic situation than undertakings which are able by manufacturing other products, to offset the difficulties encountered in relation to products in Category V.
Costs
18. Under Article 69 (2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the applicant has been unsuccessful in its submissions, it must be ordered to pay the costs.
On those grounds, THE COURT (First Chamber) hereby:
1 Dismisses the application;
2 Orders the applicant to pay the costs.