Report for the Hearing in Joined Cases C-363/88 and C-364/88

I — Facts and procedure

1. Having regard to the persistence of the crisis in the European iron and steel sector, the Commission adopted, at the end of 1983 and the beginning of 1984, a series of decisions intended to strengthen the effect of the measures previously adopted and consisting essentially of the rules for aids (Commission Decision No 2320/81/ECSC of 7 August 1981, Official Journal 1981 L 228, p. 14) and the system of production quotas (Commission Decision No 2177/83/ECSC of 28 July 1983, Official Journal 1983 L 208, p. 1); these decisions were amended on a number of occasions. Thus the Commission adopted, on 23 December 1983, Decision No 3715/83/ECSC fixing minimum prices for certain steel products and Decision No 3716/83/ECSC establishing a guarantee system for certain steel products and a system for the verification of the minimum prices (Official Journal 1983 L 373, pp. 1 and 5 respectively). The Commission also adopted, on 23 December 1983, Decision No 3717/83/ECSC introducing for steel undertakings and steel dealen a production certificate and an accompanying document for deliveries of certain products (Official Journal 1983 L 373, p. 9). That decision was taken under Article 95 of the ECSC Treaty with the assent of the Council for the purpose of ensuring the monitoring of traditional patterns of trade by means of a complete and exact identification and census of the movement of steel products within the Community. That monitoring system was supplemented by the introduction, in the context of Commission Decision No 234/84/ECSC of 31 January 1984 on the extension of the system of monitoring and production quotas for certain products of undertakings in the steel industry (Official Journal 1984 L 29, p. 1), of a new principle, imposing an obligation to conform to traditional patterns of trade in products in categories la (hot-rolled strip), lb (cold or hot-rolled sheet), II (reversing-mill plate and wide flau), and HI (heavy sections). It may be seen from Recital 9 to that decision that, in the Council's opinion: According to Article 15B of Decision No 234/84, previously cited: It should be added that Article 15B of Commission Decision No 3485/85/ECSC of 17 November 1985, extending the system of monitoring and production quotas for certain products of undertakings in the steel industry (Official Journal 1985 L 340, p. 5), applicable as from 1 January 1986, included provisions identical to those just quoted in Article 15B of Decision No 234/84, with the exception that paragraph (5) was deleted. Finally, regard being had to the improvement of the situation in the steel industry, Article 15B of Decision No 3485/85 was deleted as from 1 January 1987 by Article 1 of Commission Decision No 3746/86/ECSC of 5 December 1986, amending the aforementioned decision (Official Journal 1986 L 348, p. 1).

‘the stability of traditional patterns of deliveries of steel products within the Community is an essential factor which must be preserved if the restructuring of the steel industry is to be carried out within a competitive context compatible with the solidarity imposed by the production quota system’.

‘1. A Member Sute may submit a complaint to the Commission if it establishes, with regard to categories la, lb, II and III, that deliveries of products in one of these categories have been altered during a quarter to a significant extent compared with traditional deliveries.

2. A complaint as referred to in paragraph 1 must be submitted not later than eight weeks following the end of the quarter in question.

3. The Commission shall examine whether such a complaint is justified, on the basis of the monthly statistics sent by the Member States pursuant to Decision No 3717/83/ECSC. When making its assessment it shall take account of all the circumstances pertaining to the case in question.

4. It shall consult the Member Sutes concerned if it considers that the complaint is justified. In this event, it shall request the undertakings in question to give a commitment in writing that, during the following quarter, they will correa the imbalance in their traditional deliveries.

5. If an undertaking does not give such a commitment, or if the commitment is not honoured, the Commission may reduce the part of the undertaking's quota which may be delivered in the common market for the following quarter by a quantity not exceeding that which caused the imbalance in traditional deliveries.

6. The Commission shall inform the Member States concerned of the action taken on the complaint.’

2. For the purposes of these proceedings it should be mentioned that an association of steelmaking undertakings, EISA, had asked the Court, by way of interim decision, to suspend the operation of Article 15B of Decision No 234/84. By order in Case 45/84R EISA v Commission [1984] ECR 1759, that application was dismissed. In the order the Court stated that the condition of urgency for granting the suspension would normally be considered to have been met, but that nevertheless the commitments given by the Commission with regard to the way in which it intended to apply Article 15B removed the threat to the undertakings, which might have justified the suspension of operation. In fact during the interlocutory proceedings the Commission had made the commitments set out as follows in the order: ‘first, Article 15B will not be applied simply because an alteration in traditional deliveries has been observed; it will only be applied where the change in traditional deliveries may be ascribed to the action of undertakings engaging in practices which are contrary to Community law; secondly, the mere fact that the undertaking concerned is in receipt of aid authorized by the Commission may not give rise to a quota reduction pursuant to Article 15B; thirdly, if the Commission's inquiry reveals infringements of other provisions of Community law such as those on prices, quotas, competition or State aid, it will first of all apply the sanctions provided for those infringements’.

3. By letters sent to the Commission between 30 November 1984 and 25 February 1985, the Italian Government asked the Commission to take the corrective measures provided for in Article 15B of Decision No 234/84, previously cited, by reason of the significant alteration in deliveries of steel products in Italy during the various quarters of 1984 compared with traditional deliveries. The Associazione Industrie Siderurgiche Italiane (hereinafter referred to as ‘Assider’) made the same request by letter of 18 February 1985. These requests met with an implied rejection, which was contested before the Court by the Italian Republic and by Assider. In the judgment in Joined Cases 167 and 212/85 Assider and Italy v Commission [1987] ECR 1701, the Court took the view that although the Commission had a discretion under Article 15B(3) in determining whether a Member State's complaint must be considered justified, on the other hand, ‘it is clear from the wording of Article 15B(4) that where, on completion of its investigation, the Commission considers that the complaint is justified, it must then request the undertakings in question to give the commitment specified in that provision’. In this case, since the Commission considered the Italian Government's complaint justified as from the fourth quarter of 1984, it was required to request the undertakings in question to give a commitment to correa, as from the first quarter of 1985, the imbalance established in their traditional deliveries. The Court therefore declared void the Commission's implied refusal to take the measures provided for in Article 15B(4) of Decision No 234/84.

4. Following that judgment, Assider and its associates (namely the Italsidcr-Finsider group and the Falck company) requested the Commission to make good the damage they claimed they had suffered owing to the non-application of Article 15B, not only during 1984 but also during 1985 and 1986 when the Commission, according to the applicants, took no action even though the significant alteration in traditional deliveries persisted. That request, contained in a letter of 29 May 1987, was repeated on 30 July 1987. A similar request was made by the Italian Government by letters of 8 Juh/, 30 October and 7 and 10 November 1987. At meetings held at the beginning of 1988, the Commission proposed to compensate the applicants by granting additional quotas in category la, more particularly for products intended for the production of small welded tubes. Although that suggestion was rejected by the Italian Government, the Commission repeated it in two letters, one of them sent to the Iulian Government on 16 April 1988 and the other to Assider on 31 May 1988. Finsider and Italsider on the one hand and Falck on the other then brought this action before the Court.

5. The applications, which were lodged at the Court Registry on 14 December 1988, were brought under the second paragraph of Article 34 and the first paragraph of Article 40 of the ECSC Treaty. By order of 4 June 1991, the Court ordered the joinder of the two actions for the purposes of the oral procedure and judgment. On 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.

II — Forms of order sought by the parties

1. The applicant companies claim that the Court should: (i) declare the Commission, on behalf of the European Communities, to be liable for the damage incurred by the applicants on account of the reduction in the deliveries of products in categories la, lb and II on the national market during 1984, 1985 and 1986; (ii) order the Commission, on behalf of the European Communities, to pay compensation for the damage, if necessary after ordering an expert inquiry; (iii) order the Commission, on behalf of the European Communities, to pay the interest due on such compensation as from the date of the judgment establishing liability; (iv) order the Commission to pay the costs.

2. The Commission contends that the Court should : (i) dismiss the applications; (ii) order the applicants to pay the costs.

III — Picas in law and arguments of the parties

A— The circumstances underlying the proceedings

1. The applicants point out that the system of preserving traditional patterns of delivery, laid down by Article 15B of Decision No 234/84 was arranged in such a way that conformity with the system and its operation depended exclusively on the Commission. Only the Commission could have at its disposal the complete picture of deliveries of ECSC undertakings on a given national market and implement the necessary means to reestablish any traditional patterns which might have been exceeded in the course of the preceding quarter or quarters. Although, during 1984, 1985 and 1986, the Commission had noted that deliveries on the Italian market had been exceeded to a considerable extent, it applied neither the measures provided for in Article 15B(4), which are not in the nature of a penalty, or a fortiori the sanctions provided for by Article 15B(5). In the applicants' opinion the Commission cannot claim that it was prompted to make a prudent use of the provisions of Article 15B. For one thing it did not merely show prudence in the application of those provisions, but did not apply them at all. For another, contrary to the allegations now put forward by the defendant, no justification for such prudence was to be found either in the Court's order in Case 45/84 R, previously cited, or in the doubts which the Commission then had as to the legality of those provisions. Moreover it is futile for the Commission to claim to give Article 15B a ‘reductive’ or ‘invalidatory’ interpretation, since such an interpretation was disapproved by the Court's judgment in Joined Cases 167 and 212/85, previously cited, and the Council's statement at its 901st meeting on 22 December 1983, at which it gave its assent to the insertion of that article in the rules relating to quotas, provides no support for it. According to the applicants the Commission cannot claim that they adopted a static and rigid view, rather than a dynamic one, of the system of traditional deliveries. In fact the action is based on the official data supplied and published by the Commission itself and on the assessments which it made as regards exceeding traditional deliveries. Similarly the Commission's attempt to countenance a reductive interpretation of Article 15B on the basis of solidarity lacks relevance, because that article, far from being contrary to the principle of solidarity, is a direct manifestation of it. Nor can the Commission claim that the preservation of traditional deliveries was a secondary principle as compared with the right conferred on undertakings by Article 10(1) of Decision No 234/84 to increase within certain limits their delivery quotas in the common market for category la products used for the production of small welded tubes. In that respect the applicants remark that even for those products the principle of traditional deliveries should have been respected, as may be seen from the actual wording of Article 15B, and as confirmed by the point of view which the Commission adopted at the time. It is also futile for the Commission to claim to justify its attitude by the so-called difficulties of interpretation of Article 15B, or by the difficulties it encountered in convincing the undertakings, associations of undertakings and the States of the justification for the rule laid down by that article. On the one hand, according to the applicants, there is no ambiguity in the structure of Article 15B and its interpretation raises no difficulty and cannot leave any room for doubt or uncertainty; if the Commission had any difficulties of interpretation, that was due entirely to its attempt to read the article reductivety so as to restria its field of application and invalidate its scope. On the other hand, the Commission, as an impartial executive body, ought not to have given way to pressure from certain undertakings opposed to the application of Article 15B; the applicants state that that article laid down not a voluntary but a mandatory system for undertakings and its application cannot be made conditional upon a generalized agreement, to be reached between all parties concerned, as to its interpretation. Finally the applicants contest the supposed ‘substantial compensation’ which the Commission states that it suggested granting them in order to comply with the Court's judgment in Joined Cases 167 and 212/85, previously cited. In fact the Commission only stated that it was ready to increase the reference quotas in category la as regards products for small welded tubes. Such an offer would not have been at all advantageous to the applicants because, as the Commission admitted, the increase in production and delivery quotas in that subcategory represented a right under Article 10(1) of Decision No 234/84, and that right was not subject to any limit or condition after the abolition of the system of traditional deliveries. The applicants add that, although the Commission sutes in its defence before the Court that that additional quota could have been put to other uses, it had taken the opposite point of view at meetings held before the action was brought.

2. The Commission starts by pointing out that it was the order in Case 45/84 R, previously cited, in which the Court had expressed doubts as to the legality of Article 15B, which had prompted it to apply the anide prudently. Moreover the Commission itself was convinced that there was a possibility that it was illegal and had indicated during the preliminary stages of the case in which the order was given that Article 15B served the purpose of a ‘deterrent’, to be used ‘as a last resort’. That was also the view of the Council, which at its 901st meeting, stated that, if the traditional patterns of trade changed, the Commission could make the necessary corrections ‘in so far as no other solution has been found’, that is, if the sanctions applied to the undertakings concerned proved ineffective. The Commission therefore denies the defendants' charges. It neither totally neglected to apply Article 15B — since it pressed on with investigations at the outcome of which it applied sanctions to the undertakings responsible for disregarding the pricing rules — nor did it make an incorrect interpretation, either ‘reductive’ or ‘invalidatory’, of that article, since it simply took into account the suggestions made by the Court itself in the said order. According to the Commission the Court did not, in the judgment in Joined Cases 167 and 212/85, undertake an interpretation of Article 15B as a whole. Next the Commission explains why the principle of traditional deliveries laid down by Article 15B, which requires undertakings to abide by their market shares on the various national markets, clearly conflicts with the principle of solidarity which implies, for the allocation of quotas, that account is taken of overall demand on the Community market. According to the Commission, the principle of solidarity is the basic principle governing the quota system. Consequently the principle of traditional deliveries could only have been interpreted as a principle of secondary importance, as is confirmed, moreover, by the fact that it did not apply to all products. The system of traditional deliveries constituted an instrument making it possible to maintain and guarantee competition, particularly in a period of restructuring when certain undertakings might have been able to enjoy official aid in order to alter their traditional markets without taking normal conditions of competition into account and gain new markets, where necessary by selling at a loss. That implied a ‘dynamic’ rather than a ‘static’ view of the concept of traditional deliveries, so that account might be taken of the changes in the economic situation on the various markets as compared with the reference period so as to ensure a balance between supply and demand on each market. The Commission adds that the secondary nature of the principle of traditional deliveries is confirmed by Article 10(1) of Decision No 234/84 allowing a special system, based on liberal principles, within the quota system, for products intended for the production of small welded tubes. According to the Commission, the Council's intention, expressed in the minutes of its 901st meeting, was to remove these semi-finished products from the field of application of the measures envisaged for the monitoring of traditional patterns under Article 15B. The Commission, for its part, would have gone further by not actually excluding the semi-finished products in question from the application of Article 15B, but its efforts were not successful. In passing, the Commission points out the contradiction facing the applicants. They cannot challenge the right of other undertakings to increase their quotas in pursuance of Article 10(1) claiming that traditional deliveries will thus be exceeded, whilst at the same time refusing the Commission's offer to compensate them by increasing their quotas, on the grounds that they were entitled to such an increase. In addition the Commission stresses the efforts it made to solve the problems concerning traditional patterns and to apply Article 15B. In this regard it produces and comments on numerous documents (letters, reports of meetings, internal memoranda and the like) from which it may be seen that during 1984 and 1985 it strove to ensure that Article 15B was applied and to convince undertakings, associations of undertakings and States that the rule laid down by that article was justified. However, the application of the rule met with intrinsic difficulties because it presupposed, in fact if not in law, a general agreement between undertakings, States and the Commission on the interpretation of the article and because in particular the disturbances on the Italian market concerned semi-finished products for which Article 10(1) provided for a liberal scheme. In addition, the Commission encountered determined opposition, in particular from the Benelux steel undertakings. It is not possible to deduce, as the applicants do, that the Commission yielded to pressure and disregarded its obligations as an impartial executive body. In actual fact, in view of the technical and legal difficulties bound up with the application of Article 15B and of the contradictions between that article and Articles 2 and 4 of the ECSC Treaty on the one hand and the discipline of the quota system on the other, the Commission attempted to work out a method of application which would make it possible to meet these difficulties and contradictions, at least to some extent, whilst complying with the commitments given to the Court in the context of Case 45/84 R. As the Commission could not impose on the undertakings a system providing for sub-quotas for delivery for each Community country, it thought it should apply the system of monitoring traditional patterns flexibly on the basis of the broadest possible consensus of both the undertakings and the Member Sutes. The defendant states that, contrary to the applicants' allegations, Article 15B(4) was of a voluntary nature in the sense that, whilst the Commission was required to request the undertakings responsible to correa the imbalance in their traditional deliveries, they could voluntarily decide whether or not to give that commitment or to honour commitments given. Finally, the Commission explains the proposals for reparation and compensation which it had put to the applicants following the judgment in Joined Cases 167/85 and 212/85. It took the view that the compensation to be offered should be within the framework of the quota system. It proposed to grant them additional quotas in category la for products intended for the production of small welded tubes because traditional deliveries had been exceeded to the most significant extent in that subcategory. That was by no means an uninteresting offer for the applicants, because they could have relied on their own past reference quotas in category la itself for other uses. Tne categorical refusal given by the applicants was therefore unjustified and of such a nature as to render them liable.

B — The basis of the applications

1. The applicants claim that their applications are based on the second paragraph of Article 34 and the first paragraph of Article 40 of the ECSC Treaty and not only on Article 34. They suffered damage in fact as a result not only of the implied decision declared void by the Court in the judgment in Joined Cases 167/85 and 212/85 but also of a series of steps taken by the Commission reflected in acts and omissions before, during and after that implied decision. The Commission is wrong to refer to the Court's judgment in Joined Cases 81/85 and 119/85 Usinor v Commission [1986] ECR 1777, which concerned a case in which the action for a declaration that Commission decisions were void had been dismissed and the action for redress for the harm resulting from the decisions, based on Article 34, had therefore been declared inadmissible. In this case it is possible for the action to be based, in pursuance of Article 34 of the ECSC Treaty, on the judgment in Joined Cases 167/85 and 212/85 declaring void the only Commission decision directly concerning the applicants. Moreover the action for compensation is not based on the illegality of positive acts directly concerning them but on the Commission's persistent general conduct, so that it is possible to rely on Article 40 (judgment in Joined Cases 9/60 and 12/60 Vloebergbs v High Authority [1961] ECR 197). Thus the omission by the Commission to apply the sanctions provided for by Article 15B(5) could be taken into consideration under Article 40 of the ECSC Treaty even if that were impossible, as the Commission contends, under Article 34. According to the applicants it is thus the joint and complementary application of these two provisions of the Treaty which is the basis for their action. In any event, the legal description of the actions is a matter for the Court.

2. In its defences the Commission claims that the applicants have not specified precisely enough in their applications the legal rules on which they base their claim for compensation. Its view is that the claim could fall only within the scope of the second paragraph of Article 34 of the ECSC Treaty because the reservation in favour of that article in the first paragraph of Article 40 implies that redress for the harm resulting from a decision or a recommendation can be demanded only on the basis of Article 34. It adds that in this case the applicants' claim can relate only to any consequences of the declaration by the judgment in Joined Cases 167/85 and 212/85 that the Commission decision refusing to take the measures provided for in Article 15B(4) was void and not to those of the alleged disregard of Article 15B(5) to which the judgment did not relate (judgment in Joined Cases 81/85 and 119/85 Usinor, previously cited). In its rejoinders the Commission claims that it may be seen from the judgment in Joined Cases 9/60 and 12/60 Vloeberghs, cited by the applicants, that it is not possible to rely on Articles 34 and 40 of the ECSC Treaty jointly or as alternatives and that if one of those articles is applicable it is not possible to rely on the other. Thus Article 34 constitutes a special rule: when the conditions for applying it are met it is not possible to apply the general rule in Article 40. That point of view is confirmed by other decisions of the Court (judgment in Joined Cases 19/60 and 21/60 and 2/61 and 3/61 Fives Lille Cail [1961] ECR 281) and by academic writings. It follows that, in this case, the applicants' claim must be examined solely on the basis of Article 34.

C— The Commission's wrongful conduct

1. According to the applicants, the Commission's wrongful conduct results both from its failure to act and from the steps it actually took. As regards the Commission's failure to act, the applicants refer in the first place to the disregard of the obligation imposed by Article 15B(4). As the Court recognized in the judgment in Joined Cases 167/85 and 212/85, the Commission disregarded these provisions as regards the year 1984. For the later period (1985 and 1986), the Commission continued to evade its obligation, thus violating the principles of diligence and efficiency in the performance of its duty of supervision and monitoring. In the second place, the Commission's unlawful failure to act was constituted by the failure to apply the sanctions provided for b Article 15B(5). It is true that the Commission has a discretion in this matter. But in this case it used it b conditions which amount to a misuse of power, as the Advocate General stated in his Opinion prior to the judgment in Joined Cases 167 and 212/85. Moreover it disregarded the steel undertakings' legitimate expectation that the Commission would comply, and ensure compliance, with the rule contained in one of its general decisions. As regards the illegal steps which the Commission actually took, the applicants claim that although the Commission was entitled, under Article 10(1) of Decision No 234/84, to grant additional production quotas for products intended for the production of small welded tubes, that power could be used only in accordance, in particular, with the system of conformity with the traditional patterns of trade. The Commission granted massive additional quotas for the products which flooded the Italian market between 1984 and 1986, thus actively and voluntarily encouraging undertakings to exceed their traditional deliveries to a considerable extent. In their replies the applicants refute the arguments advanced by the Commission in its defence. On the one hand, in response to the argument that not every illegality constitutes a fauk, the applicants claim that in this case the Commission did indeed commit a fault of such a nature as to render it liable, as is confirmed by the following facts: in the judgment in Joined Cases 167/85 and 212/85 the Court noted the Commission's failure to comply with its obligation to act with diligence; however, even if that had not been so, the Court could in this case consider the wrongful nature of the Commission's conduct; the wrongful, voluntary, systematic and inexcusable disregard of the obligations laid down in Article 15B(4) and (5) could be deduced from the Opinion of the Advocate General prior to the aforesaid judgment; the structure of Article 15B is based on the principles of solidarity and guarantee of the normal conditions of competition; the failure to apply it is therefore a breach of those superior principles; in granting additional quotas for products well knowing that they would be instrumental in driving deliveries in Italy above their traditional level, the Commission showed an open and deliberate determination not to take account of the system laid down by Article 15B. Its conduct is all the more inexcusable because the Commission itself always stated that semi-finished products for small welded tubes fell within the system of traditional deliveries. On the other hand, according to the applicants, the Commission cannot claim to escape liability either by stating that it had done its best to apply Article 15B (an argument already refuted by the applicants, see above at HI A 1) or by claiming that it was led to an as it did by the order of the Court in Case 45/84 R, previously cited. In that order, which was purely a measure of conservation, the Court saw no reason for the justification for the reductive interpretation of Article 15B given by the Commission and merely took note of certain statements which the Commission had made. However, even if that reductive interpretation were to be accepted, the Commission's conduct would not exonerate it from the charge of grave negligence and inexcusable fault. In fact, according to that interpretation the measures provided for in Article 15B could have been adopted only if traditional deliveries had been exceeded because of conduct contrary to Community law on the part of the undertakings, for example on pricing. The Commission had established infringements in relation to pricing and on those grounds had imposed fines, albeit derisory ones, but had nevertheless neglected to apply the urgency procedure described in Article 15B.

2. The Commission claims, first of all, that the fault, and consequently the right to redress cannot follow automatically from a judgment by the Court declaring a measure void. In fact not every illegality constitutes a fault. In this case the Court, it is true, in its judgment in Joined Cases 167/85 and 212/85, declared the Commission's implied decision of refusal void, but did not hold that that constituted an error of such a nature as to render it liable. According to the Commission, the incorrect application of Article 15B(4) was not to be ascribed to wrongful conduct on its part, but perhaps to a mistaken interpretation of that provision following the Court's order in Case 45/84 R. The Court has consistently held that a mistake in the interpretation of a rule does not in itself amount to a fault and a fortiori does not render the Community liable (for example, judgment in Joined Cases 19/69, 20/69, 25/69 and 30/69 Richez-Parise v Cornmuííon [1970] ECR 325). The position would be different if the error were inexcusable, a question which must be assessed in terms of the specific circumstances of the individual case and the degree of complexity of the legal questions involved in the interpretation of the rule concerned (judgment in Joined Cases 14/60, 16/60, 17/60, 20/60, 24/60, 26/60 and 27/60 and 1/61 Meroni v High Authority [1961] ECR 161). In this case, the Commission sutes, the situation in which it had to act presented great difficulty from both the legal and the practical points of view, the more so as it could only interprei the order in Case 45/84 R as a considerable restriction of its margin of manoeuvre in applying Article 15B. However, even if its error were to be regarded as inexcusable, it was too slight a fault to engender an obligation to make reparation. The Commission adds that, although it did not request the undertakings which had exceeded their traditional deliveries to commit themselves to correa the excess, it was careful to ask them to conform to the traditional patterns of trade, and when they refused to give or to honour commitments, it took note of the situation and went on to the phase envisaged in Article 15B(5). It follows that the Commission's lack of diligence in the application of Article 15B(4) was in any case not of such a nature as to cause the applicants harm. Finally the Commission in its turn refutes the counterarguments put forward by the applicants: the Opinion of the Advocate General on which the applicants rely was not reflected in the judgment in Joined Cases 167/85 and 212/85; the Commission was not in breach of the principle of solidarity by refraining from applying Article 15B; the Commission attempted to settle the problems arising from the conflicting provisions of Articles 10(1) and 15B; the Commission did not disregard the function and content of the Court's order in Case 45/84 R; the Commission could only apply Article 15B(5), in accordance with the commitments given to the Court on the occasion of the aforesaid order, after establishing an infringement of other rules of Community law and imposing fines on the undertakings responsible. It was impossible to show how effective the fines imposed in this case had been, since they were imposed only three months before Article 15B(5) was deleted. The Commission adds that that paragraph allowed it a discretion in deciding to reduce quotas and the applicants have not proved that it made an illegal use of that discretion.

D — The characteristics of the damage

1. According to the applicants, the existence of damage was recognized by the Court's judgment in Joined Cases 167/85 and 212/85 and by the Advocate General in his Opinion prior to that judgment. It was abo recognized by the Commission in several documents, and in particular in the report of a meeting of 8 January 1988 drawn up by the Commission's Directorate General for the Internal Market and Industrial Affairs. Moreover the existence of damage is inherent in a failure to comply with the system of traditional deliveries. In fact, the purpose of the system was to guarantee a competitive context compatible with the phase of restructuring of undertakings so as to ensure that certain undertakings did not take advantage of the situation of others to win market shares at the latters expense. Thus the systematic failure to comply with or to apply such a system could not, according to the applicants, fail to cause damage to the undertakings it was intended to protect The Commission's attempt to minimize the damage suffered by the applicants is futile. Contrary to the defendant's contentions: the undertakings were unable to correct, even partially, the losses in deliveries which they suffered on the Iulian market by an increase in their deliveries on other Community national markets; the production capacity of the Italian undertakings was such as to enable them to retain intact their relative situation on the Italian market when faced with an increase in demand; the market loss of the Italian undertakings was not caused by an increase in imports from third countries but by Community undertakings exceeding their traditional deliveries. The applicants state, moreover, that the condition that there must be special harm is met in this case because the undertakings in the Finsider group and the Falck undertaking are the only Italian producers of category la, lb and II products, responsible for roughly 90 to 10% of production respectively. They add that that condition must be regarded as satisfied even if the view is taken that for the Commission to be rendered liable there must be a specific rule designed to protect the undertakings which have suffered harm. In fact that is precisely the object of Article 15B, which was intended to protect the relative situation of undertakings on the various markets during the restructuring phase.

2. The Commission points out that an action for damages must be based on the existence of present damage resulting from an unlawful act or omission (judgment in Case 13/69 Van Eick v Commission [1970] ECR 3) the actual existence of which must be etablished (in particular, judgment in Case 26/74 Roquette v Commission [1970] ECR 677 and the Opinion of the Advocate General). First, in the judgment in Joined Cases 167/85 and 212/85, the Court did not mention the existence of damage and referred only to ‘alterations which were to the detriment of the Italian producers’. Next, the applicants themselves refer to potential damage and not actual damage, since they describe it as the difference between what they ‘might have’ delivered and what they actually delivered. Finally, it is not correa to say, as the applicants do, that the Commission itself recognized the existence of the damage. The document on which the applicants rely was drawn up on the basis of data which they supplied. In addition, in its rejoinder in the action brought by the Finsider and Italsider companies, the Commission indicates that a recent inspection showed that there had been clandestine production by the applicants amounting to more than 200000 tonnes of strip in 1986 and 1987; the applicants had been prepared to pay ECU 93123 by way of additional levy and were fined ECU 100000 for not supplying the documents requested during the inspection. It follows, according to the Commission, that it is no longer possible to lend any credence to the figures provided by the applicants as regards either the calculation of the amount by which the traditional patterns were exceeded or of the damage which they claim to have suffered.

E — The causai link

1. The applicants claim that a causal link has been established between the Commission's conduct and the damage suffered. (a) the disregard of the traditional patterns of deliveries on the Iulian market during 1984, 1985 and 1986 caused the applicants damage. They suu that they have already discussed this point in their observations on the damage (see III D 1 above); (b) the disregard of the traditional patterns of trade was attributable to the Commission which, by its acts and omissions, did not prevent it and even openly encouraged it. In that respect the applicants recall that the system provided for in Article 15B was so conceived that its observance and operation depended entirely on the Commission. Only the Commission had the complete picture of all deliveries made by ECSC undertakings on a national market and possessed the necessary machinery to determine why traditional deliveries had been exceeded and to reestablish any traditional patterns which might have been exceeded. In the applicants' view the machinery provided for in Article 15B(4) was the keystone of the whole system. The notice sent by the Commission to undertakings for them to give a commitment to correct the imbalance in their traditional deliveries gave rise to a precise legal obligation on the part of the undertakings, any disregard of which could have justified both the application of the sanctions provided for in Article 15B(5) and a direct reaction of the undertakings which had suffered damage. According to the applicants, the Commission's failure to apply the machinery of Article 15B(4) meant that the undertakings which had exceeded their traditional deliveries did not have to make the necessary corrections either voluntarily or compulsorily since none of them had been declared responsible for any excess. It is therefore the Commission which is responsible for the absence of correction and therefore, according to Italian case-law, which is similar to that of the other Member States in the matter of responsibility for an omission, for the damage suffered by the applicants. Similarly there is a clear causal link between the granting by the Commission of additional quotas, of more than 100000 tonnes per quarter, for products for the production of small welded tubes and the exceeding of traditional deliveries at the expense of the applicants. The Commission was not unaware — or at any rate ought not to have been unaware — that that additional production was intended for the Italian market and would swell the excess established on that market. (c) The applicants contest the Commission's arguments in defence to the effect that the increase in deliveries from other Member Sutes on the Italian market does not necessarily imply equivalent damage for the Italian producers. On the one hand it is incorrect to claim, as does the Commission, that the Italian purchasers had the opportunity to obtain supplies from third countries. In fact the system of production and delivery quotas and of conformity with traditional deliveries presupposes that the whole of the internal market is a more or less impenetrable area and that imports from third countries are restrained and foreseeable. The quota system is based on the fact, which the Commission has moreover recognized as obvious in numerous other circumstances and which was taken into account by the Court in the order in Case 92/88 R Assider v Commission [1988] ECR 2425, that an increase in the quotas of certain undertakings entails an automatic and mathematical reduction in those of other undertakings; if deliveries of certain Community undertakings increase, those of other Community undertakings must diminish by the same amount, and uncontrollable and unforeseen imports from third countries cannot upset that balance. In the same way, the system laid down by Article 15B is based on the principle of close correlation between the deliveries of the various Community undertakings, since the limits resulting from the observance of traditional patterns must be to the advantage of Community undertakings and not of imports from third countries. The Commission's objection is thus unfounded and contrary to market reality; it rests on imaginary hypotheses and conflicts with the theory of adequate causality. The applicants add that the defendant's claim that Italian ‘tube-manufacturers’ were proposing to obtain supplies from third country suppliers is based on an incorrect interpretation of the record of a meeting held at the Commission with a representative of Italsider. On the other hand, the Commission cannot claim that the applicants contributed by their conduct to the damage suffered. Apart from the fact that the Commission produces no evidence in support of its allegations, it must be observed that the massive amounts by which the traditional deliveries in Italy were exceeded are due not, as the defendant now contends, to the inability of the Italian undertakings to keep their share of the market but to a systematic infringement of the pricing system by other undertakings. Finally, the defendant cannot put forward Finsider's difficulties in terms of economic efficiency because that argument is irrelevant and represents, rather, an aggravating circumstance for the Commission.

2. The Commission stresses that, to give rise to damages, the harm must be direct, that is, that there must be a direct causal link between the fault and the damage (see Mr Lagrange's Opinion in the judgment in Joined Cases 29/63, 31/63, 36/63, 39/63 to 47/63, 50/63 and 51/63 Usines de la Providence v High Authority [1965] ECR 911). There is no causal link giving rise to liability where the same result would have occurred in an identical manner even if the administration had not disregarded its obligations (judgment in Joined Cases 5/66, 7/66 and 13/66 to 24/66 Kampffmeyer v Commission [1967] ECR 245). The Court has given its views to this effect on many occasions (judgments in Case 18/60 Worms v High Authority [1962] ECR 195; in Joined Cases 64/76 and 113/76, 167/78 and 239/78 and 27/79, 28/79 and 45/79 Dumortier Frères v Council [1979] ECR 3091; and in Joined Cases 197/80 to 200/80, 243/80, 245/80 and 247/80 Ludwigshafener Walzmühle v Council and Commission [1981] ECR 3211). The applicants simply asserted, but by no means proved, that the mere application of the measures provided for in Article 15B(4) would have made it possible to reestablish the traditional patterns. Refuting once more the criticisms as to its negligence in applying Article 15B and its alleged ‘diligence’ in applying Article 10(1), the Commission observes in particular that, contrary to the applicants' wish, it was unable to proceed directly and immediately to reduce the quotas allocated to the undertakings to correa the excess in traditional deliveries, and that Article 15B(4) was not the ‘keystone’ of the system of traditional patterns. Moreover, according to the Commission, the increase in deliveries from other Member Sutes does not necessarily mean that the Italian producers automatically suffer equivalent damage. In fact, if the Commission had imposed a reduction in other undertakings' deliveries on the Italian market, the Italian ‘tube-manufacturers’ would probably have increased their imports from third countries (it may be seen in any case from the repon of the aforementioned meeting between a Commission representative and a representative of Italsider that the Italian ‘tube-manufacturers’ intended to take advantage of the most favourable market conditions and did not think it advisable to be dependent on a single supplier). In addition, when the quota system finally came to an end, the applicants' market shares continued to diminish, to the advantage of third country producers. According to the Commission it is incorrect to sute, as do the applicants, that imports from third countries were subject to so stria a system that an increase would have been impossible. To disprove these statements the Commission makes an analysis of the relations between the Community and third countries as regards steel products, from which it deduces that the system of imports from those countries was typically more flexible than the quota system and that, even though such imports could not exceed given quantities in the framework of agreements and although antidumping duties might if appropriate be imposed under GATT rules, the Italian ‘tube-manufacturers’ could have made greater use than they did of imports from third countries. The Commission was powerless in the face of such an increase in these imports and could only impose a higher abatement rate for calculating the quotas granted to Community undertakings. The defendant adds that if it had restricted the Community producers' deliveries on the Iulian market an increase in imports from third countries would have been even more probable inasmuch as, during the whole of the period from 1984 w 1986, the applicants had refused, except to a very limited extent in the case of the Finsider-Iulsider group, to align their prices on offers from certain third countries. Apart from that, the applicants had decided, generally speaking, to apply a relatively high pricing policy, whilst semi-finished products for small welded tubes had the advantage of a system of free pricing. Finally the Commission points out that the applicants contributed significantly to the origin of the alleged damage of which they complain and that by their conduct they broke any causal link. That was the case particularly with the Finsider company which, in spite of a considerable effort at restructuring, did not succeed in restoring its viability because of an insufficiently competitive industrial and commercial structure, delays in making investments and of a lack of firm management. In fact any loss of outlets on the national market by that company was due essentially to causes attributable to it, related to its production and distribution conditions, its sales organization and its market strategy.

F— The amount of the damage

1. In this respect the applicants sute that they are restricting themselves to ceruin essential information, reserving the right to supply more deuiled explanations either on the occasion of fresh proceedings relating to the amount of damage or to any expert inquiry which might be ordered by the Court. (a) As regards the amount of the damage expressed in tonnes, the applicants sute that the reduction in the Finsider-Iulsider group's deliveries is as follows: (in tonna) 1984 1985 1986 Categories Ia & II 366300 426600 588600 Category Ib 93600 70200 55800 For the FaJck company's deliveries the reduction is as follows: (in tonnes) 1984 1985 1986 Categories la & II 40700 47400 65400 Categories lb 10400 7800 6200 Contrary to the Commission's contention, these reductions should not be adjusted by the increases in deliveries, which, moreover, were modest, recorded by the applicants on the other Community markets in accordance with the principle of conformity with traditional patterns. In any case the Falck company delivered only on the Iulian market during the period in question. What is more, even if the criteria proposed by the defendant were accepted, the losses in deliveries would be further increased by more than 1300000 tonnes for the period from 1984 to 1986. The applicants add that, contrary to the Commission's claims, there is no justification for limiting the damage to the subcategory of products for producing small welded tubes. Nor is it justifiable to apply an abatement of 1% to the market shares lost (because the imbalance resulting from the excess in traditional deliveries should have been corrected as a whole), still less to calculate that abatement on all the deliveries made by the applicants on the Community market (because only the national market should have been taken into account). The Finsider and Italsider companies point out that, even if the merger of Finsider with Itatubi and the liberalization of the semifinished products intended for category Id could have the consequences set out by the Commission in its defence, those consequences are minimal. They state, moreover, that they are right to claim that the losses made by LAF and Itatubi before they were taken over by Finsider should be made good. The Falck company, for its part, emphasizes that it has never worked in the category Id sector so that its liberalization was irrelevant. Finally, according to the applicants, the Commission cannot base any argument on the fan that they did not fully use the pan of their quotas intended for the Community market and did not use the additional quotas provided for by Article 10 of Decision No 234/84. Such an argument is partially incorrect and in any case quite irrelevant. In fact the applicants acted for the best in spite of very serious delivery difficulties owing to the systematic disregard by other undertakings of the pricing rules. (b) As regards the amount of the damage expressed by vahte, the applicants claim that it is appropriate to refer to the ‘margin of contribution’, that is, the margin of income resulting from the additional production (marginal), calculated from the difference between the amount of sales and that of the variable costs (direct processing costs plus cost of raw materials used). On the other hand, the criterion for calculation adopted by the Commission, that of the ‘net profit’, is unacceptable because it would make the entire wage bill (including that for employees not directly involved in production) a variable cost. According to the applicants, the ‘margin of contribution’ to be adopted is the following: for the Finsider-Italsider Group: (in LIT/kg) 1984 1985 1986 Categories la & II 147.4 161.1 177.2 Category lb 228,5 203,4 253.9 for the Falck company: (in LIT/kg) 1984 1985 1986 Categories la & II 109,8 107,6 236,3 Category lb 160,5 11,4 266 (c) The damage to be made good would therefore be as follows: for the Finsider-Italsider group: (in LIT) 1984 1985 1986 Categories la & II 53992620000 68725260000 104299920000 Category lb 21387600000 14278680000 14167620000 for the Falck company: (in LIT) 1984 1985 1986 Categories la & II 4468860000 5100240000 15545020000 Category lb 1669200000 868920000 1649200000 These figures must be appropriately updated to take account of the devaluation of the Italian lira during those years and up to the date of the judgment. They must bear interest as from the date of the judgment.

2. The Commission discusses the amount of damage only in the alternative. (a) In its defences it supplies the following information : As regards the damage expressed in tonnes For categories la and II the Commission considers that, to appreciate correctly the damage alleged, it is necessary to take account of the toul of deliveries made by the applicants in the common market (and not only those made on the Italian market) and it is sufficient to deal only with the semi-finished products for small welded tubes, as the other products did not show any appreciable alteration as compared with traditional deliveries during the period under consideration. Moreover, to be regarded as significant, an alteration in traditional deliveries ought, according to the Commission, to exceed one percentage point of market shares. In brief, the loss in tonnes is as follows: for the Finsider-Italsider group: 1984: 184000 tonnes 1985: 119000 tonnes 1986: 57000 tonnes It is also appropriate to reduce these figures to take account of the merger with Itatubi in the fourth quarter of 1985 (as a result of which the applicants ceased to declare the amounts they supplied to that undertaking) and of the liberalization on 1 January 1986 of products intended for the production of sheet in category Id; for the Falck company: 1984: 52500 tonnes 1985: 68000 tonnes 1986: 40900 tonnes The Commission adds, however, that the market loss of which Falck complains would have been less if the company had entirely used up its quotas. Furthermore, as in the case of the Finsider and Italsider companies, account should be taken of the liberalization of semi-finished products intended for the production of category Id sheet. For category lb, the Commission considers it appropriate to take account only of the Italian market because there was no increase in the Italian undertakings' traditional deliveries on other markets. The loss of market shares by all the Italian undertakings on the national market should not however be wholly taken into account to calculate the applicants' damage since the undertakings LAF and Itatubi, before they were taken over by Finsider, in the first quarter of 1986 and the fourth quarter of 1985 respectively, made considerable deliveries on that market. Finally it is appropriate, there again, to make an abatement of one percentage point. The losses are therefore as follows: for the Finsider-Italsider group: 1984: 48100 tonnes 1985: 37700 tonnes 1986: 37400 tonnes subject to the reservation that the applicants cannot claim compensation for the losses suffered by LAF and Itatubi before they were taken over; for the Falck company: 1984: 5800 tonnes 1985: 3900 tonnes 1986: 2000 tonnes The Commission adds that the applicants did nothing to reduce the seriousness of the damage, since they did not exhaust their delivery quotas on the Community market for categories la and lb and did not ask for the provisions of Article 10(1) to be applied. That is of such a nature as to render them partially liable (judgments in Case 145/83 Adams v Commission [1985] ECR 3539; and in Case 229/84 Sommerlatte v Commission [1986] ECR 1805). Finally the Commission points out, on the one hand, that the figures for 1986 mun be altered because the statistics relating to traditional patterns could not be applied before Article 15B was deleted, which was on 31 December 1986, and on the other hand that in 1985 h had decided to apply sanctions to the undertakings which had infringed the quota or pricing system. As regards the damage expressed in terms of value According to the Commission it is appropriate to refer to the undertakings' net operaung results. The undertaking Italsider, which covers the production of the Finsider-Italsider group, made a very slight profit for its operations as a whole; and considering that semi-finished products for small welded tubes are included in the lower-priced products, it must be admitted that for these products the resuh of their operations was almost certainly negative. The Finsider-Italsider group therefore suffered no damage. As regards Falck, for similar reasons any damage suffered, which was, moreover, minimal, occurred only in 1986. The Commission remarks, moreover, that in their calculations the applicants do not include wages in working out the variable costs. That cannot be accepted since undertakings have the opportunity to vary the employment of their workforce in terms of actual production requirements. Moreover, the Commission, like the Italian Government, helps to finance this partial unemployment on the basis of Article 56 of the ECSC Treaty. (b) In its rejoinders the Commission takes the view that if the Court were to give a decision on the existence and amount of the damage, it could do so only on the basis of an expert inquiry. Such an inquiry would be all the more necessary to assess the claims of Finsider and Italsider in view of the fact that, in the light of the results of the inquiry into their production, previously mentioned, none of the data or statements they produced could any longer be taken into account.

F. Grévisse

Judge-Rapporteur

1 Language of the case: Italian.