Report for the Hearing delivered in Joined Cases 32, 52 and 57/87
I — Facts and procedure
The development of the steel market in recent years led the Commission to believe, as early as 1985, that the period of manifest crisis, which had begun at the beginning of the 1980s, was coming to an end and that it was necessary to return to unfettered production and trade by means of a gradual ending of the system of quotas.
Therefore, in its communication to the Council of 2 October 1986 relating to the organization of the steel market in 1987, the Commission provided for the liberalization of categories IV (wire rod), VI (merchant bars), Ic (galvanised sheet), pre-products belonging to category Ic and a part of category III (heavy sections).
As regards the termination of the system of quotas, Article 58 (3) of the ECSC Treaty lays down a different procedure from that provided for in paragraph (1) of that provision in respect of the introduction of such a system.
In the present cases, in order to withdraw the abovementioned products from the system of quotas, the Commission used the same procedure as that provided for in Article 58 (1) relating to the introduction of a system of quotas, which involves requesting the Council's assent.
Since the Commission's proposals received a favourable opinion from the Council only as regards the liberalization of category Ic products, Commission Decision No 3746/86/ECSC of 5 December 1986 excluded this category alone from the system of quotas.
The association of steel undertakings known as Industrie Siderurgiche Associate (ISA), (the applicant in Case 32/87), challenged that decision on the ground of a misuse of powers inasmuch as, by applying the procedure laid down in Article 58 (1) for purposes other than those for which it was intended and by circumventing the procedure laid down in Article 58 (3), which alone is applicable, the Commission misused the powers conferred on it by the Treaty. According to ISA, by making the exclusion from the system of quotas of the steel products, mentioned in its aforementioned proposal, subject to the assent of the Council and, therefore, liberalizing only those products in respect of which assent was given, the Commission gravely damaged the interests of the independent steel producers, members of the applicant association, which it has a duty to protect.
The company Alfa Acciai, (the applicant in Case 52/87), and the companies Fincamuna and Nuova Sidercamuna, (applicants in Case 57/87), contested the individual decisions by which the Commission imposed on them for the first quarter of 1987 production and delivery quotas for certain products which Commission Decision No 3746/86/ECSC did not exclude from the system of quotas, namely, as regards Alfa Acciai, category IV products and, as regards Fincamuna and Sidercamuna, category III products. The applicant undertakings consider that these individual decisions are unlawful both because they are based on an unlawful general decision and on the ground that they infringe Article 58 of the ECSC Treaty as well as the principle of nondiscrimination.
As the three cases are connected in so far as, in each of them, the validity of Decision No 3746/86 is called in question, the Court decided, by order of 8 May 1987, to join them for the purposes of the procedure and the judgment.
After hearing the report of the Judge-Rapporteur, the Court decided to open the oral procedure without any preparatory inquiry. It did, however, ask for the following documents to be lodged:
i) by the Commission, the opinion given by the Council on the proposals contained in the aforementioned communication by the Commission of 2 October 1986;
ii) by the Council, the minutes of its meeting of 20 October 1986, in so far as they concern the examination of the proposals appearing in the abovementioned communication.
The contents of the documents which the institutions produced are summarized at point IV of this report.
II — Conclusions of the parties
ISA claims that the Court should:
Declare the application admissible and well founded;
Declare void Commission Decision No 3746/86 of 5 December 1986;
Order the Commission to pay the costs.
Alfa Acciai SPA claims that the Court should:
Declare void Commission Decision SG(86)D/15838 of 23 December 1986;
Order the Commission to pay the costs.
Fincamuna SPA and Sidercamuna SPA claim that the Court should:
Declare void Commission Decision SG(86)D/15853 of 23 December 1986;
Order the Commission to pay the costs.
The Commission contends that the Court should :
a) in Case 32/87, (ISA):
Dismiss the application as inadmissible, alternatively as unfounded;
Order the applicant to pay the costs;
b) in each of the other two cases :
Dismiss the application as unfounded;
Order the applicants to pay the costs.
III — Submissions and arguments of the parties
1. The admissibility of the application made by ISA
The Commission points out that the contested decision does not affect the applicant association since none of the members of that association manufactures products coming within category Ic.
Nor can it be asserted that if, instead of requesting the assent of the Council, the Commission had submitted its proposal to the Council in accordance with Article 58 (3) of the ECSC Treaty, a failure to reach a unanimous agreement to reject it would have entailed the end of the system of quotas for all the products mentioned in that proposal. In fact the applicant could never have counted on the absence of a unanimous agreement to reject the proposal, just as it cannot now foresee the outcome of the procedure which would follow a possible annulment of the contested decision.
ISA's response is that its members manufacture products which were not liberalized, owing to the misuse of procedure (equivalent to a misuse of powers for the purpose of the Treaty) vitiating the contested decision and that it is precisely for this reason that its interest in bringing the action cannot be disputed.
Stating that to challenge the validity of a decision tainted by a procedural defect it is sufficient to show that the contested decision might have been different but for that defect, ISA rejects the Commission's argument that, even if the procedure provided for in Article 58 (3) had been followed, it would not necessarily have resulted in the liberalization of the products manufactured by its members. As to the effects of a judgment declaring the decision void, the applicant does not see how the Commission, if it were called upon again to assess the situation of the Community steel industry, could find that a state of crisis existed, when for more than a year it has been endeavouring to bring about an end to the system of quotas for the products in question.
2. The substance of the case
(a) The submission of misuse of procedure
ISA, as well as Alfa Acciai and Fincamuna SPA and Sidecamuna SPA, which claim that general Decision No 3746/86/ECSC is unlawful as the basis of the individual decisions addressed to them, point out that the procedure provided for in Article 58 (3) of the ECSC Treaty to bring the system of quotas to an end is much less stringent that that which has to be followed to introduce it. In fact, Article 58 (3) provides that ‘the system of quotas shall be ended on a proposal made to the Council by the High Authority after consulting the Consultative Committee ... unless the Council decides otherwise’, whereas paragraph (1) of that Article provides that ‘if the High Authority considers that the Community is confronted with a period of manifest crisis and that the means of action provided for in Article 57 are not sufficient to deal with this, it shall, after consulting the Consultative Committee and with the assent of the Council, establish a system of production quotas ...’.
They claim that this difference is justified by the fact that a system of quotas is clearly an exceptional measure, contrary to the general objectives of the Treaty and incompatible with the prohibition on restrictive practices designed to share or exploit markets.
In seeking to bring the system of quotas to an end by following the procedure laid down for the introduction of that system, the Commission misused its powers, inasmuch as it failed to avail itself of an autonomous decision-making power, which it is required to exercise when the conditions therefor are satisfied, and which can only be frustrated by a decision to the contrary adopted unanimously by the Council.
The Commission replies that Article 58 (3) refers expressly only to the ending of the system of quotas as a whole. It considers that a decision regarding only one or several products does not have the same scope, although it does not rule out that the paragraph (3) procedure may be applied in such a situation.
In the Commission's opinion, the paragraph (3) procedure is not a lex specialis, so that a different procedure may also be used to bring about the ending of the system of quotas. In this respect, account must be taken of the respective powers of the Commission and the Council, and in particular of the fact that, although the Commission has responsibilities proper to it as regards the establishment and management of the system of quotas, it remains nevertheless, dependent on the Council's assent when the system has to be introduced, amended or prolonged. That is the institutional equilibrium established by the ECSC Treaty as regards the system of quotas. To have recourse solely to Article 58 (3) in order to exclude from this system certain categories of products would run counter both to that equilibrium and to the interests of the Commission itself which has to ensure that it maintains a relationship of trust with the Council in order to enable it to carry out the task conferred on it in the steel-producing sector.
Finally, the Commission maintains that the use of paragraph (1) might also be based on the principle of the actus contrarius, according to which a measure may be repealed in the same way as it has been adopted.
(b) The submission of infringement of Article 58 by the individual decisions
The applicant undertakings, which dispute the individual decisions, assert that, even supposing that the Commission was entitled to make use of Article 58 (1), it is nevertheless true that, if it persists in fixing quotas whilst at the same time being convinced that the period of crisis is over, it inevitably breaches Article 58 which ties the system of quotas to the conviction that a period of crisis exists. The Commission is also in breach of Article 57 of the ECSC Treaty which provides that it must preferably have recourse to indirect means of action, and Article 5 which provides that it must carry out its task by means of limited intervention measures.
The fact that it was unsuccessful in obtaining the Council's assent for the liberalization of the products manufactured by the applicant undertakings cannot render its decision lawful. The Commission cannot in fact shelter behind the absence of the Council's assent in an attempt to exempt its decision from judicial review.
The Commission does not deny expressing the opinion that, in respect of certain products, the manifest crisis was over and that they ought therefore to be liberalized. Nevertheless, one of the legal conditions for the Commission to be able to liberalize a category of products is the assent of the Council and it has so far not obtained such assent.
(c) The submission of infringement of the principle of nondiscrimination
The applicant undertakings, which contest the individual decisions, claim that by bringing the system of quotas to an end for one category of products and not for another, at a time when it considered that a manifest crisis no longer existed for either category, the Commission infringed the principle of nondiscrimination.
The Commission considers that this complaint is without substance and overlaps with the preceding one since, like it, it is based on the absence of a liberalizing measure. The Commission's reply is therefore the same. Since it did not obtain the Council's assent on the liberalization of categories III and IV it had no choice but was obliged to continue to apply the system of quotas to the aforementioned categories and to liberalize only category Ic, the only one in respect of which the Council gave its assent. Such difference of treatment determined by the legal conditions provided for in Article 58 (1), cannot be described as discrimination.
IV — Contents of the documents produced by the Council and the Commission at the request of the Court
The minutes of the Council meeting of 20 October 1986 states that ‘the Council has carried out a detailed examination of the Commission's proposals relating to the continuation of the liberalization of the system of quotas for steel introduced under Article 58 (liberalization of categories Ic, HI (in part), IV and VI and the repeal of Article 15 (b))’ and that ‘a general agreement emerged as to the need to pursue the process of liberalization depending on the market situation and other factors’.
It is mentioned therein that the Council noted that ‘the necessary majority existed in favour of liberalization of category Ic’ although ‘the Belgian, German and Luxembourg delegations stated that their agreement was dependent on the fact that no decision to liberalize categories III, IV and VI had been taken’.
Finally it is noted that ‘the Council agrees to pursue the discussion on all points of the Commission's proposal in order to draw up an assent, if that proves possible, at the next session on 18 November’.
The minutes of the Council meeting of 18 November 1986 states that ‘the Council confirmed the position that it had adopted at its session of 20 October 1986 and by a majority gave its assent, in pursuance of Article 58, to the liberalization of category Ic’, at the same time deciding to postpone to the following session further examination of the Commission's other proposals relating to liberalization.
In the minutes of the meeting of the Council of 19 March 1987, the Council noted that the Commission intended to propose to it a new system of quotas which would take account of the increasing difficulties in implementing the present system of quotas, and that the Commission declared that it ‘did not intend to prolong the system of quotas for category IV and VI products beyond 1987’.
G. Bosco
Judge-Rapporteur
1 Language of the Case: French.