CELEX: 61981CJ0303
Steel market
Production quotas

1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 30 NOVEMBER 1981 , KLOCKNER-WERKE AG , A STEEL UNDERTAKING HAVING ITS REGISTERED OFFICE IN DUISBURG , FEDERAL REPUBLIC OF GERMANY , INSTITUTED PROCEEDINGS UNDER THE SECOND PARAGRAPH OF ARTICLE 33 OF THE ECSC TREATY , SEEKING A DECLARATION THAT THE COMMISSION ' S DECISION DATED 19 OCTOBER 1981 REFUSING IT AN INCREASE IN ITS PRODUCTION AND DELIVERY QUOTAS FOR THE FIRST QUARTER OF 1981 ( CASE 303/81 ) IS VOID .
2 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 15 DECEMBER 1981 , KLOCKNER BROUGHT A FURTHER ACTION UNDER THE SECOND PARAGRAPH OF ARTICLE 33     AND THE SECOND AND THIRD PARAGRAPHS OF ARTICLE 36 OF THE ECSC TREATY , SEEKING A DECLARATION THAT THE COMMISSION ' S DECISION OF 28 OCTOBER 1981 FINING IT FOR EXCEEDING THE AFOREMENTIONED QUOTAS IS VOID , OR , IN THE ALTERNATIVE , SEEKING TO HAVE THE FINE REDUCED ( CASE 312/81 ).
3 BY AN ORDER OF 5 MAY 1982 , THE COURT , HAVING REGARD TO THE RELATIONSHIP BETWEEN THE TWO CASES , ORDERED THAT THEY BE JOINED FOR THE PURPOSES OF THE ORAL PROCEDURE AND JUDGMENT .
4 BY A LETTER OF 19 DECEMBER 1980 , THE COMMISSION , IN PURSUANCE OF GENERAL DECISION 2794/80/ECSC , ESTABLISHING A SYSTEM OF STEEL PRODUCTION QUOTAS FOR UNDERTAKINGS IN THE IRON AND STEEL INDUSTRY , HAD NOTIFIED KLOCKNER OF ITS REFERENCE PRODUCTION FIGURES AND PRODUCTION QUOTAS FOR THE FIRST QUARTER OF 1981 . THOSE ARRANGEMENTS WERE CONFIRMED BY A LETTER DATED 4 APRIL 1981 , AFTER THE QUOTAS HAD BEEN REVISED SO AS TO EXCLUDE PRODUCTS FALLING OUTSIDE THE RESTRICTIONS .
5 IN THOSE NOTICES , WHICH WERE NOT THE SUBJECT OF ANY PROCEEDINGS , KLOCKNER ' S PRODUCTION QUOTA FOR THE AFORESAID QUARTER IN RESPECT OF ROLLED STEEL PRODUCTS IN GROUP I WAS FIXED AT 539 003 TONNES . HOWEVER , ON 4 FEBRUARY 1981 , KLOCKNER , ACTING UNDER ARTICLE 14 OF GENERAL DECISION 2794/80 , REQUESTED THE COMMISSION TO INCREASE THE QUOTA , ALLEGING THAT THE OUTPUT RESTRICTIONS IMPOSED ON IT WOULD ENTAIL ' ' EXCEPTIONAL DIFFICULTIES ' '  FOR IT .
6 BY DECISION OF 19 OCTOBER 1981 , THE COMMISSION REJECTED THE REQUEST AS UNFOUNDED . KLOCKNER BROUGHT AN ACTION UNDER ARTICLE 33 OF THE ECSC TREATY , WHICH WAS LODGED AT THE REGISTRY ON 30 NOVEMBER 1981 , SEEKING A DECLARATION THAT THAT DECISION WAS VOID .
7 DURING THE FIRST QUARTER OF 1981 , KLOCKNER EXCEEDED THE PRODUCTION QUOTA IMPOSED ON IT IN RESPECT OF ROLLED PRODUCTS IN GROUP I BY A MARGIN OF 28 682 TONNES . KLOCKNER WAS REPRIMANDED FOR THE SURPLUS IN A LETTER DATED 15 JULY 1981 , WHEREBY THE COMMISSION ASKED IT TO SUBMIT ITS COMMENTS PURSUANT TO THE FIRST PARAGRAPH OF ARTICLE 36 OF THE ECSC TREATY . KLOCKNER COMPLIED     WITH THAT REQUEST BY WAY OF LETTERS DATED 27 JULY AND 25 AUGUST 1981 , SUPPLEMENTED BY THE STATEMENTS OF ITS REPRESENTATIVES AT THE HEARING HELD ON 24 SEPTEMBER 1981 .
8 BY A DECISION OF 28 OCTOBER 1981 PURSUANT TO ARTICLE 9 OF DECISION 2794/80 , THE COMMISSION REJECTED THE EXPLANATIONS PUT FORWARD BY KLOCKNER AND FINED IT 2 151 150 EUROPEAN CURRENCY UNITS . IN REPONSE TO THAT DECISION KLOCKNER BROUGHT AN ACTION UNDER ARTICLES 33 AND 36 OF THE ECSC TREATY , WHICH WAS LODGED AT THE REGISTRY ON 15 DECEMBER 1981 AND WHICH SOUGHT EITHER A DECLARATION THAT THE COMMISSION ' S DECISION IMPOSING ON IT THE ABOVE-MENTIONED FINE WAS VOID OR , IN THE ALTERNATIVE , A REDUCTION IN ITS AMOUNT .
THE APPLICATION AGAINST THE DECISION OF 19 OCTOBER 1981 REFUSING TO INCREASE THE QUOTAS UNDER ARTICLE 14 OF GENERAL DECISION 2794/80 ( CASE 303/81 )
9 IN SUPPORT OF THIS ACTION , THE APPLICANT PUTS FORWARD TWO SUBMISSIONS , THE FIRST OF WHICH CONCERNS A DISREGARD OF THE CONCEPT OF ' ' EXCEPTIONAL DIFFICULTIES ' '  CONTAINED IN ARTICLE 14 OF GENERAL DECISION 2794/80 , AND THE SECOND THE ERRONEOUS AND UNREALISTICALLY LOW ASSESSMENT OF THE APPLICANT ' S PRODUCTIVE CAPACITY AND HENCE OF THE UTILIZATION RATE OF THOSE CAPACITIES .
FIRST SUBMISSION , ALLEGING A DISREGARD OF THE CONCEPT OF ' ' EXCEPTIONAL DIFFICULTIES ' '  CONTAINED IN ARTICLE 14 OF DECISION 2794/80
10 ARTICLE 14 OF DECISION 2794/80 IS WORDED AS FOLLOWS :
' ' WHERE THE PRODUCTION OR DELIVERY RESTRICTIONS IMPOSED BY THIS DECISION OR ITS IMPLEMENTING MEASURES ENTAIL EXCEPTIONAL DIFFICULTIES FOR AN UNDERTAKING , IT MAY REFER THE MATTER TO THE COMMISSION , PROVIDING ALL APPROPRIATE SUPPORTING DOCUMENTATION .
THE COMMISSION SHALL EXAMINE THE CASE WITHOUT DELAY , IN THE LIGHT OF THE OBJECTIVES OF THIS DECISION .
WHERE APPROPRIATE , THE COMMISSION SHALL ADAPT THE PROVISIONS OF THIS DECISION . ' '
11 IN ITS ADMINISTRATIVE PRACTICE , FOUNDED ON EXPERIENCE ACQUIRED IN THE STEEL MARKET , THE COMMISSION HAS BEEN APPLYING THE PROVISION IN THE SENSE THAT IT TAKES THE EXISTENCE OF ' ' EXCEPTIONAL DIFFICULTIES ' '  INTO CONSIDERATION WHENEVER IT FINDS THAT THE RATE OF UTILIZATION OF AN UNDERTAKING ' S PRODUCTIVE CAPACITY IS MORE THAN 10% LOWER THAN THE AVERAGE UTILIZATION RATE OF CAPACITY AMONG COMMUNITY UNDERTAKINGS .
12 THE APPLICANT MAINTAINS THAT , BY ADOPTING THAT CRITERION , THE COMMISSION IS NOT ONLY INFRINGING COMMUNITY LAW BUT ALSO MISUSING ITS POWERS , INASMUCH AS THAT CRITERION , WHICH IS PURELY AUTOMATIC AND FORMAL , IS NOT CONTAINED IN ARTICLE 14 , OF WHICH IT CONTRAVENES BOTH THE SPIRIT AND THE LETTER . THE COMMISSION IS , ON THE CONTRARY , REQUIRED TO TAKE INTO CONSIDERATION ALL THE SPECIAL CIRCUMSTANCES OF EACH PARTICULAR CASE , IN ORDER TO ASSESS WHETHER THE UNDERTAKING CONCERNED HAS ENCOUNTERED EXCEPTIONAL DIFFICULTIES , EVEN AT A STRICTLY ECONOMIC AND FINANCIAL LEVEL .
13 THE COMMISSION CONTENDS THAT IT IS REQUIRED TO AVOID ANY DIFFERENTIATION IN ITS TREATMENT OF THE UNDERTAKINGS INVOLVED , AND HENCE TO ADHERE TO A STRICTLY OBJECTIVE CRITERION SUCH AS THE ONE ADOPTED . IT FURTHER STRESSES THAT , IN THE APPLICATION OF ARTICLE 14 , ONLY THOSE DIFFICULTIES MAY BE TAKEN INTO CONSIDERATION WHICH HAVE RESULTED DIRECTLY FROM THE ESTABLISHMENT AND ENFORCEMENT OF THE QUOTA SYSTEM , WHEREAS THAT IS NOT THE CASE WITH DIFFICULTIES OF AN ECONOMIC NATURE CONNECTED WITH AN UNDERTAKING ' S PROFITABILITY .
14 IT SHOULD BE OBSERVED FIRST OF ALL THAT THE EQUITY CLAUSE IN ARTICLE 14 DOES NOT APPLY UNLESS AN UNDERTAKING IS EXPERIENCING EXCEPTIONAL DIFFICULTIES WHICH ARE CAUSED BY THE ENFORCEMENT OF THE SYSTEM OF PRODUCTION QUOTAS . WHILST IT IS TRUE - AS THE APPLICANT STATES - THAT THE EQUITY CLAUSE IS AIMED AT DIFFICULTIES BROUGHT UPON CERTAIN UNDERTAKINGS BY THE ENFORCEMENT OF GENERAL RULES WHICH DO NOT TAKE ACCOUNT OF SPECIFIC SITUATIONS , THE COMMISSION CANNOT HOWEVER BE TAKEN TO TASK FOR FIXING A THRESHOLD DESIGNED TO CONFER THE     BENEFITS OF THE CLAUSE ON THOSE UNDERTAKINGS WHOSE UTILIZATION RATES ARE RELATIVELY FAR REMOVED FROM THE COMMUNITY AVERAGE .
15 SINCE THE CRISIS WAS WIDESPREAD AND THUS COMMON TO ALL STEEL UNDERTAKINGS , THE COMMISSION WAS ENTITLED TO TAKE THE VIEW THAT THE OUTPUT RESTRICTIONS IMPOSED COULD NOT ENTAIL ' ' EXCEPTIONAL ' '  DIFFICULTIES EXCEPT FOR UNDERTAKINGS SATISFYING CERTAIN CONDITIONS RELATING TO THEIR UTILIZATION RATES .
16 FURTHER , TO SET THE THRESHOLD AT A DEVIATION OF 10% FROM THE AVERAGE CANNOT BE CONSIDERED UNLAWFUL . THE DEVIATION REQUIRED BY THE COMMISSION SHOULD , ON THE ONE HAND , ENABLE THE SUBSTANTIAL INTEGRITY OF THE QUOTA SYSTEM TO BE MAINTAINED AND , ON THE OTHER HAND , PERMIT EXCEPTIONAL CIRCUMSTANCES DUE TO THE ENFORCEMENT OF SUCH A SYSTEM TO BE TAKEN INTO ACCOUNT . BY SETTING THE MARGIN AT 10% , THEREFORE , THE COMMISSION HAS NOT EXCEEDED THE BOUNDS OF ITS DISCRETION UNDER ARTICLE 14 .
17 AS FAR AS THE ALLEGATION OF A MISUSE OF POWER IS CONCERNED , IT SHOULD BE POINTED OUT THAT THE APPLICANT HAS EXPLAINED IT IN ITS REPLY BY ALLEGING THAT THE COMMISSION , IN ADOPTING THE DISPUTED INDIVIDUAL DECISION , WRONGLY THOUGHT THAT WHERE THE UTILIZATION RATE WAS LESS THAN 10% BELOW THE AVERAGE , IT WAS NO LONGER EMPOWERED TO EXERCISE ITS DISCRETION WITH A VIEW TO ASCERTAINING WHETHER IN THE APPLICANT ' S CASE THERE WERE ' ' EXCEPTIONAL DIFFICULTIES ' ' . THE ALLEGATION MERGES WITH THE APPLICANT ' S MAIN ARGUMENT , NAMELY THAT THE CRITERION ADOPTED BY THE COMMISSION INFRINGES ARTICLE 14 OF THE GENERAL DECISION INASMUCH AS IT EXCLUDES FROM THE AMBIT OF THE ARTICLE THOSE CIRCUMSTANCES WHICH DO NOT GIVE RISE TO A UTILIZATION RATE MORE THAN 10% BELOW THE COMMUNITY AVERAGE . AS THAT INTERPRETATION OF ARTICLE 14 HAS ALREADY BEEN REFUTED BY THE COURT , THAT CLAIM CANNOT BE UPHELD .
18 THE FIRST SUBMISSION MUST THEREFORE BE DISMISSED .
SECOND SUBMISSION , ALLEGING AN UNDERESTIMATION OF THE APPLICANT ' S PRODUCTIVE CAPACITY
19 THE APPLICANT ARGUES IN THE ALTERNATIVE THAT , EVEN IF THE LAWFULNESS OF THE CRITERION ADOPTED BY THE COMMISSION IN APPLYING ARTICLE 14 IS ACCEPTED , AN     INCREASE IN ITS QUOTAS SHOULD BE ALLOWED . THE DEFENDANT IS WRONG , IT MAINTAINS , IN CLAIMING THAT THE RATE OF UTILIZATION OF KLOCKNER ' S CAPACITY STOOD AT ONLY 5.4% BELOW THE AVERAGE , BECAUSE IN FACT THE DEVIATION WAS 17% . IN THE FIRST PLACE , THE COMMISSION IS RELYING ON INACCURATE DATA CONCERNING THE OUTPUT CAPACITY OF THE BREMEN NO II HOT-ROLLED WIDE-STRIP MILL AND , IN THE SECOND PLACE , IT WRONGLY OMITTED TO GIVE CONSIDERATION TO THE CAPACITY OF THE OTHER ROLLING-MILL IN THE SAME WORKS ( THE BREMEN NO I MILL ), THE RUNNING OF WHICH WAS TEMPORARILY HALTED DURING 1974 . HENCE , ONCE THESE MISTAKES HAVE BEEN CORRECTED , THE COMMISSION MUST INCREASE THE DISPUTED QUOTAS PRECISELY BY VIRTUE OF ITS USUAL CRITERION .
20 AS REGARDS THE FIRST PART OF THAT ARGUMENT , CONCERNING THE OUTPUT CAPACITY OF THE BREMEN NO II MILL , REFERENCE SHOULD BE MADE TO THE REASONS STATED IN THE JUDGMENT OF THE COURT OF 7 JULY 1982 ( CASE 119/81 , ( 1982 ) ECR 2627 ) ON THE SUBJECT OF KLOCKNER ' S PRODUCTION QUOTAS FOR THE SECOND QUARTER OF 1981 , IN CONNECTION WITH WHICH THE SAME PROBLEM HAD PREVIOUSLY BEEN RAISED .
21 ONCE AGAIN , THE APPLICANT REFERS TO THE ' ' KAWASAKI EXPERT OPINION ' '  OF 1 MAY 1981 , WHICH IS A REPORT DRAWN UP JOINTLY BY A GROUP CONSISTING OF EXPERTS FROM THE BELGIAN CENTRE DE RECHERCHES METALLURGIQUES ( CENTRE FOR METALLURGICAL RESEARCH ) AND FROM THE JAPANESE COMPANY , KAWASAKI . THE COURT HAS HELD THAT OPINION TO BE VALUELESS OWING , IN PARTICULAR , TO THE DIVERGENCE OF VIEWS WHICH IT DISCLOSES BETWEEN THE TWO GROUPS OF EXPERTS WHO DRAFTED IT , INASMUCH AS THE BELGIAN INSTITUTION GIVES A LOWER ESTIMATE OF THE CAPACITY AT ISSUE THAN THAT ADOPTED BY THE COMMISSION , WHEREAS THE EXPERTS FROM THE JAPANESE COMPANY POSTULATE AN APPRECIABLY HIGHER CAPACITY .
22 IN THESE PROCEEDINGS THE APPLICANT HAS FAILED TO FURNISH ANY NEW FACTUAL INFORMATION WHICH MIGHT ENABLE THE ABOVE FINDING TO BE REVISED . BY PRODUCING THE JESCHAR REPORT , BASED ON A MATHEMATICAL SIMULATION , THE APPLICANT IS ENDEAVOURING TO REVISE ONE ASPECT OF THE REPORT BY THE BELGIAN INSTITUTION AND KAWASAKI , WHICH HAS BEEN HELD BY THE COURT TO BE IN ANY CASE INCONCLUSIVE . AS TO THE WOLLERT-ELMENDORF REPORT RELIED ON BY THE APPLICANT , IT IS AN ACCOUNTANCY DOCUMENT DESIGNED TO EVALUATE THE FINANCIAL CONSEQUENCES OF THE FIXING OF THE PRODUCTION QUOTAS ALLOCATED TO THE UNDERTAKING FOR THE THIRD QUARTER OF 1981 , AS COMPARED WITH A HYPOTHETICAL SITUATION DESCRIBED BY THE APPLICANT , CONSISTING IN THE ALLOCATING OF QUOTAS     BASED ON A HYPOTHETICAL OUTPUT CONSISTENT WITH AVERAGE CAPACITY UTILIZATION AMONGST COMMUNITY UNDERTAKINGS . THAT ACCOUNTANCY REPORT , WHICH IS INTENDED TO EVALUATE WHAT IS FINANCIALLY AT STAKE IN THE LITIGATION BETWEEN THE APPLICANT AND THE COMMISSION , IS BASED ON AN ASSESSMENT OF A PRODUCTIVE CAPACITY ( 459 000 TONNES A MONTH , OR 5 508 000 TONNES A YEAR ) WHICH THE COURT HAS ALREADY EXPRESSLY REJECTED IN ITS JUDGMENT OF 7 JULY 1982 . THE REPORT THEREFORE SHEDS NO NEW LIGHT ON THE QUESTION RAISED BY THE APPLICANT CONCERNING ITS PRODUCTIVE CAPACITY .
23 AS TO THE SECOND PART OF THE SUBMISSION , CONCERNING THE FAILURE TO GIVE CONSIDERATION TO THE CAPACITY OF THE BREMEN NO I ROLLING-MILL WHICH WAS TAKEN OUT OF COMMISSION IN 1974 , IT IS SUFFICIENT TO RECALL THAT THE COURT TOOK THE VIEW , IN THE JUDGMENT MENTIONED ABOVE , THAT SINCE DECISION 2794/80 FIXES A VERY DEFINITE REFERENCE PERIOD , IT DOES NOT ALLOW ANYTHING OTHER THAN THE ACTUAL PRODUCTIVE CAPACITY DURING THAT PERIOD TO BE TAKEN INTO ACCOUNT . IN VIEW OF THE FACT THAT THE BREMEN NO I ROLLING-MILL WAS OUT OF COMMISSION DURING THOSE PERIODS , THE COMMISSION WAS JUSTIFIED IN DISREGARDING ITS PRODUCTIVE CAPACITY .
24 SINCE THE SECOND SUBMISSION ALSO CANNOT BE UPHELD , THE APPLICATION IN CASE 303/81 AS A WHOLE MUST BE DISMISSED .
THE APPLICATION AGAINST THE DECISION OF 28 OCTOBER 1981 FINING THE APPLICANT FOR EXCEEDING THE QUOTA LIMITS ( CASE 312/81 )
25 IN SUPPORT OF ITS SECOND APPLICATION , THE APPLICANT PUTS FORWARD A NUMBER OF SUBMISSIONS WHICH MAY BE SUMMARIZED AS FOLLOWS :
1 . ILLEGALITY OF GENERAL DECISION 2794/80 , WHICH IS THE LEGAL BASIS FOR THE INDIVIDUAL DECISION IN DISPUTE ;
2.ILLEGALITY OF THE INDIVIDUAL DECISION OF 19 OCTOBER 1981 REFUSING TO INCREASE THE QUOTAS UNDER ARTICLE 14 OF DECISION 2794/80 , WHICH IS THE LOGICAL PREMISE OF THE INDIVIDUAL DECISION IN DISPUTE ;
3.BREACH OF A PROMISE GIVEN TO THE UNDERTAKING BY THE COMMISSION ' S REPRESENTATIVE , NAMELY TO WAIVE ANY PECUNIARY SANCTION FOR EXCEEDING THE RELEVANT QUOTA LIMITS ;
4.EXISTENCE OF AN EMERGENCY SITUATION JUSTIFYING THE OVER-PRODUCTION AND PRECLUDING ITS PENALIZATION BY WAY OF A FINE .
SUBMISSIONS ALLEGING THAT DECISION 2794/80 AND THE INDIVIDUAL DECISION OF 19 OCTOBER 1981 ARE ILLEGAL
26 DURING THE ORAL PROCEDURE , IN VIEW OF THE FACT THAT THE ABOVE-MENTIONED JUDGMENT OF 7 JULY 1982 HAD UPHELD THE LEGALITY OF DECISION 2794/80 BY REJECTING ALL OF KLOCKNER ' S SUBMISSIONS IN THAT CONNECTION IN CASE 119/81 , THE APPLICANT DECLARED THAT IT WOULD DESIST FROM RAISING THE QUESTION AGAIN . THERE IS THEREFORE NO FURTHER REASON FOR THE COURT TO EXAMINE IT .
27 THE SECOND ARGUMENT HAS LIKEWISE BECOME DEVOID OF PURPOSE ON THE GROUND THAT THE ACTION BROUGHT AGAINST THE INDIVIDUAL DECISION OF 19 OCTOBER 1981 HAS BEEN DISMISSED AS UNFOUNDED .
SUBMISSION ALLEGING BREACH OF THE PROMISE NOT TO IMPOSE THE FINE
28 THE APPLICANT POINTS OUT THAT IN MARCH 1981 , BY WHICH TIME IT WAS ALREADY CLEAR THAT KLOCKNER WOULD EXCEED THE QUOTAS GRANTED TO IT FOR THE FIRST QUARTER OF 1981 , THE COMMISSION PROMOTED THE NEGOTIATIONS KNOWN AS EUROFER II , WHICH SOUGHT TO OBTAIN AGREEMENT FROM THE LARGER EUROPEAN STEEL-WORKS ON VOLUNTARY RESTRICTIONS OF PRODUCTION , IN ORDER TO AVOID EXTENDING THE QUOTA SYSTEM . IN THAT CONNECTION , TALKS WERE HELD BETWEEN THE COMMISSION AND KLOCKNER , BECAUSE THE APPLICANT HAD NO INTENTION OF TAKING PART IN THE NEGOTIATIONS AND THE COMMISSION WAS ENDEAVOURING TO OVERCOME ITS RESISTANCE .
29 IN THAT CONNECTION IT IS ALLEGED THAT MR DEFRAIGNE , THE CHEF DE CABINET OF THE VICE-PRESIDENT OF THE COMMISSION , MR DAVIGNON , ACTING FOR AND ON BEHALF OF THE LATTER , MADE A PROMISE TO MR GIENOW , THE CHAIRMAN OF     KLOCKNER ' S EXECUTIVE BOARD , DURING A TELEPHONE CONVERSATION ON 19 MARCH 1981 , NAMELY THAT IF KLOCKNER UNDERTOOK TO PARTICIPATE IN THE NEGOTIATIONS , THE COMMISSION WOULD ' ' SOLVE THE PROBLEM ' '  ARISING FROM THE FACT THAT BY THE END OF THE FIRST QUARTER OF 1981 THE APPLICANT WAS DUE TO PRODUCE MORE THAN THE PROVISIONAL QUOTA HITHERTO ALLOCATED TO IT ; THE ADJUSTMENT WAS TO BE EFFECTED IRRESPECTIVE OF THE SUCCESS OR FAILURE OF THE EUROFER II NEGOTIATIONS .
30 KLOCKNER TAKES THE VIEW THAT THE PROMISE IN QUESTION IS BINDING ON THE COMMISSION BECAUSE IT WAS MADE BY THE RESPONSIBLE AUTHORITY , FOR WHOM MR DEFRAIGNE ACTED MERELY AS A MESSENGER . KLOCKNER CLAIMS THAT , REGARD BEING HAD TO ITS CONTEXT , THE PROMISE WAS CLEAR AND PRECISE IN CONTENT , ITS SUBJECT-MATTER BEING THE COMMISSION ' S WAIVER OF A FINE , EVEN IF THE MEANS TO BE EMPLOYED IN ACHIEVING THAT END WERE NOT SPECIFIED .
31 THE COMMISSION DISPUTES THE BASIS OF KLOCKNER ' S ARGUMENT ON BOTH FACTUAL AND LEGAL GROUNDS , CONTENDING THAT MR DEFRAIGNE , IN TELEPHONING , DID NOT USE THE WORDS ALLEGED BY THE APPLICANT , NOR HAD HE GIVEN ANY PROMISES ' ' FOR AND ON BEHALF OF MR DAVIGNON , AS HIS MESSENGER ' ' ; AND THAT , IN ANY EVENT , THERE CAN BE NO QUESTION OF A PROMISE SUCH AS MIGHT COMMIT THE DEFENDANT , REGARD BEING HAD TO THE GENERAL NATURE OF THE UTTERANCES ASCRIBED TO MR DEFRAIGNE .
32 THE COMMISSION FURTHER ARGUES THAT THE SUPPOSED PROMISE WAS NOT SUCH AS TO BIND IT , FOR LACK OF RATIFICATION BY THE COMPETENT DEPARTMENT ; THAT A HYPOTHETICAL RATIFICATION WOULD HAVE BEEN UNLAWFUL IN ANY CASE , SINCE THE FINE IS MANDATORY WHENEVER QUOTAS ARE EXCEEDED ; AND FINALLY , THAT IF THE SUPPOSED PROMISE WERE INTERPRETED TO MEAN THAT IT ENVISAGED AN INCREASE IN THE QUOTAS SUFFICIENT TO COVER THE MARGIN OF EXCESS FOR THE QUARTER AT ISSUE , IT WAS INVALID FOR LACK OF BEING EVIDENCED IN WRITING .
33 KLOCKNER ' S ARGUMENT MUST BE DISALLOWED , FIRST ON ACCOUNT OF THE GENERAL NATURE OF THE UTTERANCES ASCRIBED TO MR DEFRAIGNE . THE USE OF THE EXPRESSION ' ' SOLVE THE PROBLEM ' ' , EVEN IF EXAMINED IN THE CONTEXT EXPOUNDED BY THE APPLICANT , CANNOT BE REGARDED AS A COMMITMENT TO ENGAGE IN A SPECIFIC COURSE OF ACTION .
34 WHATEVER THE CIRCUMSTANCES , EVEN IF IT WERE HYPOTHETICALLY POSSIBLE TO ACCEPT THAT THE UTTERANCES ATTRIBUTED TO MR DEFRAIGNE CONCERNED THE NON-ENFORCEMENT OF THE FINE , SUCH A DECLARATION WOULD BE DEVOID OF LEGAL FORCE , FOR IF THE ' ' PROMISE ' '  RELATED TO THE WAIVER OF THE LEGAL CONSEQUENCES OF OVER-PRODUCTION OFFICIALLY DETERMINED , IT WOULD BE ILLEGAL INASMUCH AS ARTICLE 9 OF DECISION 2794/80 REQUIRES THE COMMISSION TO IMPOSE THE FINE WHENEVER PRODUCTION IN EXCESS OF THE QUOTAS IS DETERMINED .
35 IT FOLLOWS THAT THAT SUBMISSION ALSO MUST BE DISMISSED .
SUBMISSION AS TO AN EMERGENCY SITUATION
36 THE APPLICANT MAINTAINS THAT IF IT HAD OBSERVED THE QUOTAS ALLOCATED TO IT , THE RESULTANT LOSSES WOULD HAVE BEEN SO SERIOUS THAT IT COULD NOT HAVE SURVIVED . THAT STATE OF AFFAIRS IS ALLEGEDLY DUE , PRIMARILY , TO THE EXCESSIVELY LOW LEVEL OF THE QUOTAS GRANTED TO IT , WHICH ENTAILED A RATE OF UTILIZATION OF OUTPUT CAPACITY FAR LOWER THAN THE COMMUNITY AVERAGE , AND HENCE INADEQUATE REVENUE IN RELATION TO OVERHEAD COSTS . IN THE SECOND PLACE , THE UNDERTAKING IS ENCOUNTERING SPECIAL DIFFICULTIES AT THE ECONOMIC AND FINANCIAL LEVEL , OWING TO THE VERY HIGH COST OF RESTRUCTURING THE PLANT WHICH IT HAS BROUGHT INTO OPERATION SINCE 1973 , IN RESPONSE TO THE SUGGESTION AND INDUCEMENTS OF THE COMMISSION ITSELF . THOSE EXPENSES LED TO A LACK OF LIQUID FUNDS WHICH HAD REPERCUSSIONS ON THE INDEBTEDNESS AND THE RESERVES OF THE BUSINESS . THE PRESENCE OF PRECARIOUS FINANCIAL CIRCUMSTANCES IS PROVED BY AN EXPERT REPORT PREPARED BY ACCOUNTANTS AND SUBMITTED BY THE APPLICANT . LASTLY , THE UNDERTAKING REFERS TO THE CRISIS IN THE STEEL MARKET .
37 THE APPLICANT WAS CONSEQUENTLY CONFRONTED BY THE ALTERNATIVE OF EITHER CONTRAVENING THE QUOTA SYSTEM IN ORDER TO ACHIEVE A REVENUE CONSISTENT WITH ITS ECONOMIC SITUATION OR ELSE ABIDING BY THE QUOTAS AND BEING THEREBY FORCED INTO INSOLVENCY . KLOCKNER THEREFORE TOOK ACTION IN AN EMERGENCY SITUATION , WITH THE RESULT THAT ITS CONDUCT , ALTHOUGH ILLEGAL IN AN OBJECTIVE SENSE , WAS JUSTIFIED , AND THAT NO SANCTION CAN BE IMPOSED UPON IT .
38 KLOCKNER MAINTAINS THAT , SINCE AN EMERGENCY SITUATION IS RECOGNIZED IN THE LEGAL SYSTEMS OF ALL MEMBER STATES AS JUSTIFYING UNLAWFUL CONDUCT , THE SAME     PRINCIPLE MUST PREVAIL IN COMMUNITY LAW . INDEED , THE FUNDAMENTAL RIGHT OF EVERY INDIVIDUAL TO SURVIVE IS SAFEGUARDED IN COMMUNITY LAW , PARTICULARLY IN THE FIELD OF THE QUOTA SYSTEM FOR STEEL PRODUCTION INASMUCH AS IT FORMS THE BASIS FOR A NUMBER OF PROVISIONS OF THE GENERAL DECISION OF THE COMMISSION , SUCH AS THOSE PROVIDING FOR THE RAISING OF THE QUOTAS IN CASES OF EXCEPTIONAL DIFFICULTIES OR OF EXCESSIVELY LOW RATES OF UTILIZATION OF PRODUCTIVE CAPACITY , OR AGAIN THOSE PROVIDING FOR A REDUCTION OF THE ABATEMENT RATE APPLICABLE TO THE REFERENCE PRODUCTION OF SMALL UNDERTAKINGS MANUFACTURING REINFORCING BARS OR OF UNDERTAKINGS IN GREECE . THOSE PROVISIONS ARE MERELY EXAMPLES OF THE PRACTICAL APPLICATION WITHIN THE COMMUNITY OF THE PRINCIPLE OF THE EMERGENCY SITUATION .
39 THE APPLICANT MAINTAINS THAT THE FACT THAT THE ABOVE-MENTIONED PROVISIONS ARE APPLICABLE ONLY TO CERTAIN CATEGORIES OF SMALL UNDERTAKINGS ENTAILS A BREACH OF THE PRINCIPLE OF NON-DISCRIMINATION , INASMUCH AS THE RESERVATION IN FAVOUR OF THE EMERGENCY SITUATION MUST NECESSARILY BE GENERAL IN CHARACTER , REGARDLESS OF THE STRUCTURE OR THE SIZE OF AN UNDERTAKING .
40 ACCORDING TO THE APPLICANT , THE CONDITIONS FOR RECOGNIZING AN EMERGENCY SITUATION ARE ALL SATISFIED IN THIS CASE . THE INTEREST INFRINGED WAS MERELY FORMAL IN CHARACTER , AIMING TO ACHIEVE AN ORDERLY RUNNING OF THE QUOTA SYSTEM , WHEREAS THE ILLEGAL CONDUCT WAS DESIGNED TO SAFEGUARD A FUNDAMENTAL RIGHT , NAMELY THE RIGHT TO SURVIVAL . THE PERILOUS SITUATION CONSTITUTING THE EMERGENCY IS A DIRECT CONSEQUENCE , BOTH OF THE ESTABLISHMENT AND OF THE ENFORCEMENT OF THE QUOTA SYSTEM , AND IS IN NO WAY DUE TO BAD BUSINESS-MANAGEMENT OR MISTAKES OF ECONOMIC POLICY . ON THE CONTRARY , THE UNDERTAKING HAS COMPLIED FULLY WITH THE COMMISSION ' S SUGGESTIONS FOR MODERNIZING THE COMMUNITY ' S STEEL INDUSTRY . LASTLY , THE UNDERTAKING HAS BEEN UNABLE TO HAVE RESORT TO ANY LEGAL MEANS IN ORDER TO ESCAPE THE DANGER OF INSOLVENCY .
41 THE COMMISSION CONTENDS IN THE FIRST PLACE THAT AN EMERGENCY SITUATION CANNOT BE INVOKED IN THE SPECIFIC CONTEXT OF THE QUOTA SYSTEM FOR STEEL PRODUCTION , OWING TO ITS INCOMPATIBILITY WITH THE OBJECTIVES OF ARTICLE 58 OF THE ECSC TREATY . THAT ARTICLE AIMS TO DISTRIBUTE EQUITABLY AMONGST ALL COMMUNITY UNDERTAKINGS THE SACRIFICES REQUIRED AS A RESULT OF THE CRISIS IN THE STEEL SECTOR , WITH A VIEW TO MAINTAINING OR RESTORING THEIR PROFITABILITY IN THE LONG TERM , WHEREAS THAT GOAL WOULD BE UNATTAINABLE IF EVERY UNDERTAKING     WERE ABLE TO EXEMPT ITSELF FROM ANY SACRIFICE BY PLEADING AN EMERGENCY SITUATION . BREACHES OF THE QUOTA LIMITS WOULD , IF PERMISSIBLE ON THAT SCORE , NECESSARILY ENTAIL LOWERING THE QUOTAS OF OTHER UNDERTAKINGS , WITH THE RESULT THAT THE LATTER , IN THEIR TURN , MIGHT CLAIM TO FIND THEMSELVES IN AN EMERGENCY SITUATION AND THEREBY JUSTIFY EXCEEDING THEIR QUOTAS .
42 AT ALL EVENTS , THE COMMISSION DENIES THAT THE CONDITIONS FOR AN EMERGENCY SITUATION ARE FULFILLED IN THIS INSTANCE . IN ITS VIEW , THE APPLICANT ' S FUTURE WAS NOT AT RISK WHEN THE OVER-PRODUCTION AT ISSUE OCCURRED ; MOREOVER , THE SUPPOSED RISK WAS NOT A RESULT OF THE ESTABLISHMENT OF THE QUOTA SYSTEM BUT WAS DUE TO MISTAKES MADE BY THE APPLICANT IN ITS INVESTMENT POLICY IN PREVIOUS YEARS . THE ACCOUNTANCY REPORT DOES NOT AFFORD RELIABLE EVIDENCE TO SUSTAIN KLOCKNER ' S ARGUMENTS , INASMUCH AS IT RELATES TO A SINGLE SECTOR OF THE UNDERTAKING AND IS BASED ON DATA WHICH CANNOT BE CHECKED . CONFLICTING INTERESTS SET THE SURVIVAL OF ONE UNDERTAKING AGAINST THAT OF THE MAJORITY , IF NOT THE TOTALITY , OF THE OTHERS . LASTLY , THE APPLICANT COULD HAVE REMOVED THE SUPPOSED THREAT TO ITS EXISTENCE BY LEGAL MEANS AND WAS THEREFORE IN NO WAY JUSTIFIED IN TAKING THE LAW INTO ITS OWN HANDS .
43 BEFORE CONSIDERATION IS GIVEN TO THE COMMISSION ' S MAIN CONTENTION , NAMELY THAT THE PRINCIPLE OF AN EMERGENCY SITUATION IS INCOMPATIBLE WITH ARTICLE 58 OF THE ECSC TREATY , THE SPECIAL CIRCUMSTANCES PLEADED BY THE APPLICANT IN SUPPORT OF ITS APPLICATION MUST BE EXAMINED .
44 AS TO THE FIRST CIRCUMSTANCE WHICH SUPPOSEDLY LED TO THE EMERGENCY SITUATION , NAMELY THE AWARD OF A QUOTA WHICH WAS INSUFFICIENT IN RELATION TO THE UNDERTAKING ' S ACTUAL PRODUCTIVE CAPACITY , IT MUST BE RECALLED THAT THE COURT HAS ALREADY REFUTED THAT ARGUMENT , WHICH CANNOT THEREFORE BE TAKEN INTO CONSIDERATION .
45 AS TO THE OTHER CIRCUMSTANCE WHICH SUPPOSEDLY BROUGHT ABOUT THE EMERGENCY SITUATION , NAMELY THE VERY HIGH COST OF THE RESTRUCTURING CARRIED OUT BY THE UNDERTAKING SINCE 1973 , IT SHOULD BE OBSERVED THAT THAT FACT DERIVES FROM A CHOICE OF ECONOMIC POLICY MADE BY THE UNDERTAKING ITSELF . UNDER THE LEGAL SYSTEMS OF THE MEMBER STATES , HOWEVER , ONE OF THE ESSENTIAL PREREQUISITES FOR     AN ACKNOWLEDGEMENT THAT AN EMERGENCY SITUATION EXISTS IS PRECISELY THAT THE PERILOUS SITUATION JUSTIFYING THE UNLAWFUL ACT SHALL NOT HAVE BEEN BROUGHT ABOUT BY THE AUTHOR OF THAT ACT . THAT PREREQUISITE IS THEREFORE NOT FULFILLED IN THIS CASE .
46 AS FAR AS CONCERNS THE MANIFEST CRISIS WHICH STRUCK THE STEEL MARKET , IT IS APPROPRIATE TO STRESS THAT THE CRISIS AFFECTED STEEL UNDERTAKINGS IN GENERAL AND THUS NECESSITATED THE ESTABLISHMENT OF THE QUOTA SYSTEM PROVIDED FOR BY ARTICLE 58 OF THE ECSC TREATY . THAT ARTICLE PROVIDES THAT IN THE EVENT OF A DECLINE IN DEMAND , IF THE COMMISSION CONSIDERS THAT THE COMMUNITY IS CONFRONTED WITH A PERIOD OF MANIFEST CRISIS AND THAT THE OTHER MEANS OF ACTION PROVIDED FOR IN THE TREATY ARE NOT SUFFICIENT TO DEAL WITH IT , IT IS REQUIRED , FOLLOWING THE CONSULTATIONS STIPULATED THEREIN , TO ESTABLISH A SYSTEM OF PRODUCTION QUOTAS . THE SYSTEM WAS LAWFULLY SET UP BY THE COMMISSION BY MEANS OF DECISION 2793/80 , COMPLIANCE WITH WHICH IS REQUIRED OF EVERY UNDERTAKING CONCERNED . HOWEVER , THE SYSTEM OF PRODUCTION QUOTAS WOULD BE GRAVELY COMPROMISED - OR INDEED SET AT NOUGHT - IF EVERY UNDERTAKING WERE ABLE , BY PLEADING AN EMERGENCY SITUATION DUE TO SERIOUS ECONOMIC DIFFICULTIES , TO EXCUSE ITSELF FROM OBSERVANCE OF THE RESTRICTIONS AND TO EXCEED AT WILL THE PRODUCTION QUOTA ALLOCATED TO IT . THE CHAIN REACTION THEREBY RELEASED WOULD CULMINATE IN THE COLLAPSE OF THE SYSTEM , SO THAT ARTICLE 58 OF THE TREATY WOULD BECOME A DEAD LETTER .
47 THE ABOVE CONSIDERATIONS INDICATE THAT , EVEN SUPPOSING THAT THE CONCEPT OF AN EMERGENCY SITUATION WERE ADMITTED IN PRINCIPLE INTO COMMUNITY LAW , THE APPLICANT ' S LAST SUBMISSION ALLEGING SUCH A SITUATION MUST BE DISALLOWED .
THE ALTERNATIVE CLAIM FOR A REDUCTION IN THE AMOUNT OF THE FINE
48 THE APPLICANT HAS NOT SET FORTH ANY SPECIAL ARGUMENTS IN SUPPORT OF ITS ALTERNATIVE CLAIM FOR A REDUCTION IN THE AMOUNT OF THE FINE . IT MUST THEREFORE BE PRESUMED THAT IT IS BASED ON THE SAME ARGUMENTS AS UNDERLIE THE PRINCIPAL CLAIM . IN EXAMINING THOSE ARGUMENTS , THE COURT HAS FOUND NO REASONS SUCH AS TO JUSTIFY A REDUCTION OF THE FINE .
Decision on costs
COSTS
49 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS IF THEY HAVE BEEN ASKED FOR IN THE SUCCESSFUL PARTY ' S PLEADING . AS THE APPLICANT HAS FAILED , IT MUST BE ORDERED TO PAY THE COSTS .
Operative part
ON THOSE GROUNDS ,
THE COURT ( FOURTH CHAMBER )
HEREBY :
1 . DISMISSES THE APPLICATIONS ;
2 . ORDERS THE APPLICANT TO PAY THE COSTS .