# EUR-Lex - 61961J0017 - EN

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# 61961J0017

**Judgment of the Court of 13 July 1962. - Klöckner-Werke AG and Hoesch AG v High Authority of the European Coal and Steel Community. - Joined cases 17/61 and 20/61. **

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European Court reports French edition Page 00615 Dutch edition Page 00645 German edition Page 00655 Italian edition Page 00597 English special edition Page 00325 Danish special edition Page 00331 Greek special edition Page 00787 Portuguese special edition Page 00131 *

Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part

## Keywords

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1 . COMMON FINANCIAL ARRANGEMENTS - ESTABLISHMENT AND FUNCTIONING - GUIDING PRINCIPLES

( ECSC TREATY, ARTICLE 53 )

2 . COMMON FINANCIAL ARRANGEMENTS - CRITERIA FOR APPLICATION TO THE ECONOMY

( ECSC TREATY, ARTICLE 53 )

3 . COMMON FINANCIAL ARRANGEMENTS - UNDERTAKING - CONCEPT

( ECSC TREATY, ARTICLE 80 )

4 . UNDERTAKINGS - UNITY OF ECONOMIC ACTIVITY - SEPARATE LEGAL PERSONALITY - GROUPS OF UNDERTAKINGS - PARENT COMPANY AND SUBSIDIARIES - ABSENCE OF LEGAL UNITY

( ECSC TREATY, ARTICLE 80 )

5 . COMMON FINANCIAL ARRANGEMENTS - EQUALIZATION OF FERROUS SCRAP - LEVY - PURCHASE OF SCRAP - BROAD INTERPRETATION OF THIS CRITERION - INEFFECTIVENESS OF RESERVATION CLAUSES

( ECSC TREATY, ARTICLE 53 )

6 . DISCRIMINATION - CONCEPT

( ECSC TREATY, ARTICLES 3 ( B ) AND 4 ( B ))

Summary

1 . IN WORKING OUT THE FINANCIAL ARRANGEMENTS WHICH IT ESTABLISHES FOR SAFE-GUARDING THE STABILITY OF THE MARKET THE HIGH AUTHORITY HAS A DUTY TO TAKE ACCOUNT OF THE ECONOMIC CIRCUMSTANCES IN WHICH THOSE ARRANGEMENTS HAVE TO BE APPLIED, SO THAT THE AIMS PURSUED MAY BE ATTAINED UNDER THE MOST FAVOURABLE CONDITIONS AND WITH THE SMALLEST POSSIBLE SACRIFICES BY THE UNDERTAKINGS AFFECTED . THIS PRINCIPLE OF JUSTICE HOWEVER MUST ALWAYS BE HARMONIZED WITH THE PRINCIPLE OF LEGAL CERTAINTY . THESE TWO PRINCIPLES MUST BE SO RECONCILED AS TO ENTAIL THE MINIMUM OF SACRIFICE BY PERSONS AS A WHOLE WITHIN THE COMMUNITY .

## Summary

2 . BY REASON OF THE VARIED AND CHANGING NATURE OF ECONOMIC LIFE, CLEAR AND OBJECTIVE CRITERIA OF GENERAL APPLICATION AND PRESENTING CERTAIN COMMON CHARACTERISTICS, MUST BE USED IN THE ESTABLISHMENT AND FUNCTIONING OF THE FINANCIAL ARRANGEMENTS FOR SAFE-GUARDING THE STABILITY OF THE COMMON MARKET . TO THIS END IT IS IMPOSSIBLE TO TAKE ACCOUNT OF EVERY DIFFERENCE WHICH MAY EXIST IN THE ORGANIZATION OF ECONOMIC UNITS SUBJECT TO THE ACTION OF THE HIGH AUTHORITY FOR FEAR OF FETTERING THAT ACTION AND RENDERING IT INEFFECTIVE .

3 . AN UNDERTAKING IS CONSTITUTED BY A SINGLE ORGANIZATION OF PERSONAL, TANGIBLE AND INTANGIBLE ELEMENTS UNITED IN AN AUTONOMOUS LEGAL ENTITY, PURSUING A GIVEN LONG-TERM ECONOMIC AIM .

4 . THE CREATION OF EVERY LEGAL ENTITY IN THE FIELD OF ECONOMIC ORGANIZATION INVOLVES THE ESTABLISHMENT OF A SEPARATE UNDERTAKING; A PARTICULAR ECONOMIC ACTIVITY CANNOT BE CONSIDERED AS FORMING A SINGLE UNIT IN LAW WHEN THE LEGAL EFFECTS OF THAT ACTIVITY MUST BE SEPARATELY ATTRIBUTED TO SEVERAL DISTINCT LEGAL ENTITIES . THIS PRINCIPLE ALSO APPLIES IN THE CASE OF A GROUP OF UNDERTAKINGS CONTROLLED BY A PARENT COMPANY AND HAVING A CLOSELY INTEGRATED PRODUCTION CYCLE IN WHICH ACCOUNT IS TAKEN OF THE OUTPUT OF THE GROUP AS A WHOLE AND NOT THAT OF THE INDIVIDUAL SUBSIDIARIES, FOR IT MUST BE RECOGNIZED IN LAW THAT THE ACTIVITY OF THE GROUP TAKES PLACE BETWEEN LEGAL PERSONS WHO IN LAW ARE PARTIES TO THE ECONOMIC EXCHANGES .

5 . PURCHASE AS A CRITERION FOR THE LEVY WITHIN THE FRAMEWORK OF THE EQUALIZATION SCHEME FOR SCRAP MUST BE INTERPRETED IN A BROAD SENSE . IN FACT PURCHASE MUST BE IDENTIFIED WITH EVERY TRANSFER WHICH TAKES PLACE WHEN THE UNDERTAKING CONSUMING THE SCRAP RECEIVES IT FROM AN OUTSIDE SOURCE IN RETURN FOR THE FIXING OF A PRICE . THE FACT OF THIS TRANSFER CANNOT BE AVOIDED BY A CLAUSE RETAINING OWNERSHIP FOR THE PURPOSE OF SCRAP TO BE SUBSEQUENTLY RECOVERED .

6 . FOR THE HIGH AUTHORITY TO BE ACCUSED OF DISCRIMINATION, IT MUST BE SHOWN TO HAVE TREATED LIKE CASES DIFFERENTLY, THEREBY SUBJECTING SOME TO DISADVANTAGES AS OPPOSED TO OTHERS WITHOUT SUCH DIFFERENTIATION BEING JUSTIFIED BY THE EXISTENCE OF SUBSTANTIAL OBJECTIVE DIFFERENCES .

Parties

IN JOINED CASES 17/61

## Parties

KLOCKNER-WERKE AG, HAVING ITS REGISTERED OFFICE AT DUISBURG, REPRESENTED BY ITS BOARD OF DIRECTORS, ASSISTED BY MESSRS ETZEL, ERICH WEBER I, GROSSHANS, STRIEPEN AND ALTENBURG, ADVOCATES OF THE DUISBURG BAR, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF MR WOOPEN, 2 RUE DU FORT-ELISABETH,

AND 20/61

HOESCH AG, HAVING ITS REGISTERED OFFICE AT DORTMUND, REPRESENTED BY ITS BOARD OF DIRECTORS, ASSISTED BY BERNHARD AUBIN, PROFESSOR OF LAW AT THE UNIVERSITY OF THE SAARLAND, SAARBRUCKEN, WITH AN ADDRESS FOR SERVICE AT THE CHAMBERS OF WERNER VON SIMSON, ADVOCATE OF THE DUSSELDORF BAR, BERTRANGE-LUXEMBOURG, APPLICANTS,

V

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, REPRESENTED BY ITS LEGAL ADVISER, BASTIAAN VAN DER ESCH, ACTING AS AGENT, ASSISTED BY WOLFGANG SCHNEIDER, ADVOCATE OF THE FRANKFURT BAR, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT ITS OFFICES, 2 PLACE DE METZ, DEFENDANT,

Subject of the case

APPLICATION FOR ANNULMENT OF :

## Subject of the case

1 . THE DECISION OF THE HIGH AUTHORITY OF 14 JUNE 1961, NOTIFIED TO THE APPLICANT ON 30 JUNE 1961 ( CASE 17/61 );

2 . THE DECISION OF THE HIGH AUTHORITY OF 5 JULY 1961, NOTIFIED TO THE APPLICANT ON 25 JULY 1961 ( CASE 20/61 );

REJECTING APPLICATIONS FOR EXEMPTION FOR THE EQUALIZATION CONTRIBUTION,

Grounds

P . 339

## Grounds

ADMISSIBILITY

THE ADMISSIBILITY OF THE APPLICATIONS HAS NOT BEEN FORMALLY CONTESTED AND THE COURT HAS NO CRITICISM TO RAISE OF ITS OWN MOTION . THE APPLICATIONS ARE THEREFORE ADMISSIBLE .

ON THE SUBSTANCE OF THE CASE

I - SUBMISSION BASED ON INFRINGEMENT OF THE TREATY OR OF THE RULES OF LAW RELATING TO ITS APPLICATION

1 . THE CONCEPTS OF 'UNDERTAKING' AND 'PURCHASE' FOR THE PURPOSES OF THE APPLICATION OF THE EQUALIZATION SCHEME FOR SCRAP

THE APPLICANTS MAINTAIN THAT SCRAP MOVING BETWEEN THEIR RESPECTIVE SUBSIDIARIES IS OWN RESOURCES, WITHIN THE MEANING OF THE BASIC DECISIONS, OF ONE AND THE SAME UNDERTAKING, CONSTITUTED, AS REGARDS THE APPLICANT KLOCKNER, BY THE GROUP ENTITY OF THE PARENT COMPANY AND ITS SUBSIDIARIES AND, AS REGARDS THE APPLICANT HOESCH, BY THE PARENT COMPANY WHICH ENGAGED IN PRODUCTION THROUGH THE INTERMEDIARY OF ITS SUBSIDIARIES, THESE BEING STRIPPED OF THE ESSENTIAL CHARACTERISTICS OF AN UNDERTAKING .

IN SUPPORT OF THEIR ARGUMENT, THE APPLICANTS EMPHASIZE THE VERY WIDE POWERS ENJOYED BY THE PARENT COMPANY IN RELATION TO ITS SUBSIDIARIES, WHICH ARE STRIPPED OF ALL AUTONOMY . THE NATIONAL LAW OF MEMBER STATES IN CERTAIN CIRCUMSTANCES TREATS GROUPS CONSTITUTED BY THE PARENT COMPANY AND ITS SUBSIDIARIES AS ANALOGOUS TO UNDERTAKINGS; THIS IS ESPECIALLY SO IN THE CASE OF GERMAN FISCAL LAW . IN THE PRESENT CASE MOREOVER THERE WERE CONTRACTS WHEREBY THE PROFITS AND LOSSES ON THE ACTIVITIES OF THE SUBSIDIARIES WERE TAKEN OVER IN TOTO BY THE PARENT COMPANY . ON THIS POINT THE APPLICANTS INVOKE CERTAIN PASSAGES, TAKEN OUT OF CONTEXT FROM THE JUDGMENTS OF THE COURT IN JOINED CASES 32 AND 33/58 ( REC . 1958-1959, PP . 300 ET SEQ .), CASE 42/58 ( REC . 1958-1959, PP . 399 ET SEQ .) AND JOINED CASES 42 AND 49/59 ( REC . 1961, PP . 141 ET SEQ ) AND MAINTAIN THAT THE ILLEGALITY OF THE EXEMPTION OF GROUP SCRAP LAID DOWN BY THOSE JUDGMENTS DOES NOT APPLY TO THEM BECAUSE THEY REFERRED TO 'KONZERNE' ( CONCERNS ) WHICH WERE NOT COMPLETELY INTEGRATED .

P . 340

IT MUST FIRST BE OBSERVED THAT THE HIGH AUTHORITY, IN WORKING OUT AND APPLYING THE FINANCIAL ARRANGEMENTS WHICH IT HAS ESTABLISHED TO SAFE-GUARD THE STABILITY OF THE MARKET, HAS INDEED A DUTY TO TAKE ACCOUNT OF THE ACTUAL ECONOMIC CIRCUMSTANCES IN WHICH THESE ARRANGEMENTS HAVE TO BE APPLIED, SO THAT THE AIMS PURSUED MAY BE ATTAINED UNDER THE MOST FAVOURABLE CONDITIONS AND WITH THE SMALLEST POSSIBLE SACRIFICES BY THE UNDERTAKINGS AFFECTED . THIS PRINCIPLE OF JUSTICE HOWEVER MUST ALWAYS BE HARMONIZED WITH THE PRINCIPLE OF LEGAL CERTAINTY WHICH LIKEWISE IS BASED ON THE REQUIREMENTS OF JUSTICE AND ECONOMY .

THESE TWO PRINCIPLES MUST BE SO RECONCILED AS TO ENTAIL THE MINIMUM OF SACRIFICE BY COMMUNITY MEMBERS AS A WHOLE .

BY REASON OF THE VARIED AND CHANGING NATURE OF ECONOMIC LIFE, CLEAR AND OBJECTIVE CRITERIA OF GENERAL APPLICATION AND PRESENTING CERTAIN COMMON FUNDAMENTAL CHARACTERISTICS MUST BE USED IN THE ESTABLISHMENT AND FUNCTIONING OF THE FINANCIAL ARRANGEMENTS FOR SAFEGUARDING THE STABILITY OF THE COMMON MARKET . IT IS THUS IMPOSSIBLE TO TAKE ACCOUNT OF EVERY DIFFERENCE THAT MAY EXIST IN THE ORGANIZATION OF ECONOMIC UNITS SUBJECT TO THE ACTION OF THE HIGH AUTHORITY FOR FEAR OF FETTERING THAT ACTION AND RENDERING IT INEFFECTIVE .

TO DEFINE SCRAP SUBJECT TO THE EQUALIZATION LEVY THE HIGH AUTHORITY, IN ITS DECISIONS N.S 22/54 ET SEQ ., TOOK AS ITS CRITERION THE PURCHASE OF THE SCRAP BY THE UNDERTAKING CONSUMING IT .

AS THE COURT RECOGNIZED IN ITS JUDGMENT IN JOINED CASES 42 AND 49/59 ( REC . 1961, P . 155 ), THIS CRITERION MUST BE BROADLY INTERPRETED . PURCHASE NEED NOT NECESSARILY FULFIL ALL THE CONDITIONS REQUIRED BY THE APPROPRIATE NATIONAL CIVIL LAW FOR THE VALIDITY AND EFFECTIVENESS OF A CONTRACT OF SALE BUT MUST RATHER BE APPLIED TO EVERY TRANSFER EFFECTED BY THE UNDERTAKING CONSUMING IT WHEN THAT UNDERTAKING RECEIVES SCRAP FROM AN OUTSIDE SOURCE AT A PRICE TO BE FIXED .

P . 341

TO DEFINE THE SCOPE OF THIS CRITERION THE CONCEPT OF AN UNDERTAKING MUST BE STUDIED MORE CLOSELY .

AN UNDERTAKING IS CONSTITUTED BY A SINGLE ORGANIZATION OF PERSONAL, TANGIBLE AND INTANGIBLE ELEMENTS, ATTACHED TO AN AUTONOMOUS LEGAL ENTITY AND PURSUING A GIVEN LONG TERM ECONOMIC AIM .

ACCORDING TO THIS CONCEPT THE CREATION OF EVERY LEGAL ENTITY IN THE FIELD OF ECONOMIC ORGANIZATION INVOLVES THE ESTABLISHMENT OF A SEPARATE UNDERTAKING; A PARTICULAR ECONOMIC ACTIVITY CANNOT BE REGARDED AS FORMING A SINGLE UNIT IN LAW WHEN THE LEGAL EFFECTS OF THAT ACTIVITY MUST BE SEPARATELY ATTRIBUTED TO SEVERAL DISTINCT LEGAL ENTITIES .

IT FOLLOWS FROM THE VERY FACT OF THE CREATION OF A DISTINCT LEGAL PERSON THAT THE LAW RECOGNIZES IN THAT PERSON A FORMAL AUTONOMY AND RESPONSIBILITY OF ITS OWN, SO THAT THE GRANTING OF LEGAL PERSONALITY TO THE DIFFERENT SUBSIDIARIES HAS HAD AS ITS OBJECT AND EFFECT IN LAW THE GRANTING TO EACH OF THEM OF CONTROL OVER ITS ACTIVITIES AND RESPONSIBILITY FOR THE RISKS INVOLVED THEREIN .

SUCH A CHANGE IN THE LEGAL POSITION ARISES SOLELY FROM GRANTING A LEGAL PERSONALITY, WITHOUT REGARD TO THE PERMANENCE OF THE ECONOMIC SITUATION EXISTING BEFORE THE CHANGE .

IN THIS LIGHT IT CANNOT BE DENIED THAT THE CONDITIONS FOR THE EXISTENCE OF A LEGALLY AUTONOMOUS UNDERTAKING ARE ALSO FULFILLED IN THE CASE OF A LEGAL PERSON WHOSE INTERESTS ARE CLOSELY BOUND UP WITH THOSE OF OTHER SUCH PERSONS WHOSE PURPOSES ARE DETERMINED BY DIRECTIVES FROM OUTSIDE .

IT FOLLOWS THAT EVEN IN THE CASE OF A GROUP OF UNDERTAKINGS CONTROLLED BY A PARENT COMPANY AND HAVING A CLOSELY INTEGRATED PRODUCTION CYCLE IN WHICH THE OUTPUT OF THE GROUP AS A WHOLE AND NOT THAT OF THE INDIVIDUAL SUBSIDIARIES IS TAKEN INTO ACCOUNT IT MUST BE RECOGNIZED IN LAW THAT THE ACTIVITY OF THE GROUP TAKES PLACE BETWEEN LEGAL PERSONS WHO IN LAW ARE PARTIES TO ECONOMIC EXCHANGES .

IN THESE CIRCUMSTANCES, THE ALLEGATIONS OF THE APPLICANTS WHICH SEEK TO SHOW THAT DIFFERENCES EXIST BETWEEN THEIR GROUPS AND OTHER SORTS OF 'KONZERNE' ( CONCERNS ) ARE OF NO AVAIL .

THE ABOVEMENTIONED CONCEPT OF AN UNDERTAKING AS APPLIED HERE FOR THE PURPOSES OF THE EQUALIZATION SCHEME, CONSTITUTES A LEGALLY JUSTIFIED CRITERION WHICH SHOULD SERVE TO DETERMINE THE LEGAL PERSONS UPON WHOM CHARGES UNDER PUBLIC LAW FALL .

P . 342

IT FOLLOWS THAT, IN ORDER TO DETERMINE THE MOVEMENTS OF SCRAP SUBJECT TO EQUALIZATION, IT IS NOT THE GROUP AS A WHOLE WHICH MUST BE LOOKED AT BUT EACH OF THE SEVERAL LEGAL PERSONS INDIVIDUALLY CONSTITUTING THE UNDERTAKINGS .

THIS CONCLUSION DOES NOT RUN COUNTER TO THE FACT THAT GERMAN FISCAL LAW HAS ADOPTED DIFFERENT CRITERIA .

THE EXPLANATION FOR THIS DIFFERENCE IS THAT THE SOLE PURPOSE OF FISCAL LAW IS TO BRING IN REVENUE TO THE STATE BUDGET BY TAXING THE INCREASED WEALTH PRESUMED TO ARISE FROM THE MOVEMENT OF GOODS, WHILST THE EQUALIZATION SCHEME IS INTENDED TO MAINTAIN STABILITY IN THE SCRAP MARKET AND TO THIS END IT IMPOSES A LEVY DIRECTLY ON EVERY MOVEMENT OF SCRAP BETWEEN DIFFERENT UNDERTAKINGS EVEN WHEN FROM THE ECONOMIC STANDPOINT SUCH MOVEMENT DOES NOT CONSTITUTE A TRUE TRANSFER OF WEALTH .

IN THE CIRCUMSTANCES THE APPLICANTS' PLEAS CONCERNING THE CONCEPT OF AN UNDERTAKING MUST BE REJECTED .

2 . THE CONCEPT OF AN UNDERTAKING AND THE ATTITUDE OF THE HIGH AUTHORITY

THE APPLICANTS GO ON TO REFER TO THE PAST ATTITUDE OF THE HIGH AUTHORITY WHICH LED BOTH OF THEM TO BELIEVE THAT THE HIGH AUTHORITY SHARED THEIR IDEA OF THE CONCEPT OF AN UNDERTAKING . THEY OBSERVE MOREOVER THAT THE HIGH AUTHORITY ADOPTED THE SAME ATTITUDE TOWARDS THEM AND MAINTAIN THAT, EVEN IF THE COURT WERE TO BE UNABLE TO ACCEPT THEIR ARGUMENTS, THE HIGH AUTHORITY CANNOT BE ALLOWED TO GO BACK ON ITS OWN ACTION (' VENIRE CONTRA FACTUM PROPRIUM ').

IT MUST BE STATED AT THE OUTSET THAT THE ATTITUDE TO WHICH THE APPLICANTS REFER RELATED TO MATTERS SUCH AS DECLARATIONS CONCERNING INVESTMENTS OR THE GENERAL LEVY NONE OF WHICH HAD ANYTHING TO DO WITH THE FUNCTIONING OF THE EQUALIZATION SCHEME FOR SCRAP . THEREFORE, QUITE APART FROM THE QUESTION WHETHER THE ATTITUDE OF THE HIGH AUTHORITY MIGHT HAVE GIVEN GROUNDS FOR THINKING THAT IN OTHER RESPECTS IT CONSIDERED THE PARENT COMPANIES AS UNDERTAKINGS FOR THE PURPOSES OF ARTICLE 80 OF THE ECSC TREATY, THE APPLICANTS WERE NOT JUSTIFIED IN INTERPRETING THESE BASIC DECISIONS IN THE LIGHT OF THE ATTITUDE OF THE HIGH AUTHORITY ON MATTERS OUTSIDE THE APPLICATION OF THE EQUALIZATION SCHEME .

MOREOVER THE ADMINISTRATIVE AUTHORITY IS NOT ALWAYS BOUND BY ITS PREVIOUS ACTIONS IN ITS PUBLIC ACTIVITIES BY VIRTUE OF A RULE WHICH, IN RELATIONS BETWEEN THE SAME PARTIES, FORBIDS THEM TO VENIRE CONTRA FACTUM PROPRIUM .

P . 343

IN THESE CIRCUMSTANCES THIS PLEA OF THE APPLICANTS MUST BE REJECTED .

3 . ON THE QUESTION WHETHER THE DISPUTED SCRAP CAN BE CONSIDERED AS 'BOUGHT SCRAP'

THE APPLICANTS MAINTAIN THAT THE DISPUTED SCRAP WAS NOT THE SUBJECT OF A CONTRACT OF SALE OR SIMILAR TRANSACTION WITHIN THE MEANING OF THE JUDGMENT IN JOINED CASES 42 AND 49/59 AND THAT THERE WAS THEREFORE NO 'PURCHASE' WITHIN THE MEANING OF THE BASIC DECISIONS AND OF THE CASE LAW OF THE COURT . IN THE CASE OF KLOCKNER THERE WERE SIMPLY EXCHANGES OF MATERIALS BETWEEN ITS SUBSIDIARIES IN COMPLIANCE WITH THE DIRECTIVES OF THE PARENT COMPANY, WHILST THE APPLICANT HOESCH INVOKES THE CLAUSE OF THE CONTRACT WHEREBY THE OWNERSHIP OF THE SCRAP WAS VESTED IN THE SUBSIDIARY CONSUMING IT .

HOWEVER IT IS TO BE OBSERVED THAT IN THE CASE OF BOTH APPLICANTS A PRICE WAS ALWAYS FIXED WHEN SCRAP WAS TRANSFERRED FROM ONE SUBSIDIARY TO ANOTHER . EVEN IF IT WERE TO BE ADMITTED, AS KLOCKNER CLAIMS, THAT THESE PRICES WERE SIMPLY BOOK FIGURES FOR CALCULATING COST PRICES, THE VERY FACT THAT EACH SUBSIDIARY FIXES A BOOK FIGURE FOR ITS TRANSFERS OF SCRAP TO OTHER SUBSIDIARIES INDICATES THAT THERE IS A TRANSFER OF OWNERSHIP .

FURTHER, THERE IS NO NEED TO CONSIDER WHETHER, UNDER THE RELEVANT CIVIL LAW, MOVEMENTS OF THE DISPUTED SCRAP BETWEEN THE SUBSIDIARIES OF EACH OF THE APPLICANTS TOOK PLACE IN PURSUANCE OF AN ACTUAL CONTRACT OF SALE; IN FACT THESE TRANSFERS OF SCRAP FROM ONE UNDERTAKING TO ANOTHER ARE SUBJECTED AS SUCH TO THE LEVY .

FURTHERMORE, AS APPEARS FROM WHAT HAS BEEN SAID ABOVE, THE USE BY A SUBSIDIARY OF SCRAP PRODUCED BY ANOTHER SUBSIDIARY WHICH, ALTHOUGH UNDER THE CONTROL OF THE SAME PARENT COMPANY AND BELONGING TO THE SAME GROUP, HAS A SEPARATE LEGAL PERSONALITY, CANNOT BE REGARDED AS IMPLYING AN INCREASE IN THE PRODUCTIVITY OF THE UNDERTAKING CONSUMING THE SCRAP LOOKED AT AS AN ENTITY, IN THE MEANING SPECIFIED BY THE COURT IN ITS JUDGMENTS IN JOINED CASES 32 AND 33/58 AND CASE 42/58 ( REC . 1958-1959, P . 306 AND P . 406 ).

IT FOLLOWS THAT TO EXEMPT THIS SCRAP WOULD CONFER UNFAIR ADVANTAGES ON THAT UNDERTAKING AND SO DISTORT COMPETITION . THEREFORE THE ARGUMENTS ADDUCED BY THE APPLICANTS ON THIS POINT MUST LIKEWISE BE REJECTED .

FINALLY, AS REGARDS THE CLAUSE DEALING WITH THE RETENTION OF OWNERSHIP OF THE SCRAP, WHICH IS REFERRED TO BY THE APPLICANT HOESCH, IT MUST AT ONCE BE OBSERVED THAT THIS CLAUSE IS CONTAINED NOT IN AN AGREEMENT BETWEEN THE PARTIES CONCERNED BUT IN A UNILATERAL DEED OF WESTFALENHUTTE . EVEN IF IT WERE TO BE REGARDED AS A CLAUSE IN A CONTRACT IT CANNOT BE RELEVANT IN THE PRESENT CASE . IN FACT, IT IS IMPLICIT IN THE VERY CLAUSE, REFERRED TO BY THE APPLICANT TO PROVE THE EXISTENCE OF A RETENTION OF OWNERSHIP OVER THAT PART OF THE RAW MATERIAL SUBSEQUENTLY RECOVERED IN THE FORM OF SCRAP, THAT IT PROVIDED FOR TRANSFER OF THE OWNERSHIP OF THE OTHER PART, THAT IS TO SAY, THE STEEL TO BE PROCESSED .

P . 344

IN ORDER EFFECTIVELY TO ESTABLISH RETENTION OF OWNERSHIP OF THE DISPUTED SCRAP, THE CLAUSE IN QUESTION OUGHT TO COVER NOT THE OBLIGATORY CONTRACTUAL EFFECTS OF DECLARING THAT THE SCRAP IS NOT SOLD BUT RATHER THE IMMEDIATE TRANSFER OF OWNERSHIP WITH RETENTION OF THE RIGHT OF OWNERSHIP BY WESTFALENHUTTE OF PART OF THE STEEL PASSED OVER BY IT TO OTHER SUBSIDIARIES .

IN ANY EVENT THE RETENTION OF OWNERSHIP OF A CONSTITUENT PART OF A THING, A PART THE QUALITY AND QUANTITY OF WHICH ARE UNDETERMINED, IS NOT PERMISSIBLE UNDER PARAGRAPH 93 OF THE GERMAN CIVIL CODE RELATING TO THE OWNERSHIP OF THINGS SITUATED IN THE FEDERAL REPUBLIC . MOREOVER SUCH A CLAUSE IS INCOMPATIBLE WITH THE FUNDAMENTAL PRINCIPLES FINDING EXPRESSION IN THE CONCEPT OF ACCESSION WHICH PRESUPPOSES THAT SPECIAL RIGHTS OF OWNERSHIP OVER A CONSTITUENT AND INDETERMINATE PART OF THE SAME THING ARE EXCLUDED .

4 . THE COMPLAINT OF DISCRIMINATION

THE APPLICANTS ACCUSE THE DEFENDANT OF HAVING INFRINGED ARTICLES 3 ( B ) AND 4 ( B ) OF THE TREATY ON THE GROUND THAT THE FORMAL CONCEPT OF AN UNDERTAKING USED BY THE HIGH AUTHORITY FOR THE PURPOSES OF EQUALIZATION LED TO DISCRIMINATION AGAINST THEM BY PUTTING THEM IN AN UNFAVOURABLE POSITION IN RELATION TO COMPETING UNDERTAKINGS .

THE DEFENDANT RAISES A PRELIMINARY OBJECTION TO THE ADMISSIBILITY OF THIS COMPLAINT BECAUSE THE APPLICANTS HAVE NOT INVOKED IT IN RELATION TO THE SUBSIDIARY COMPANIES, WHILST IT WAS PRECISELY THESE, AND NOT THE APPLICANT PARENT COMPANY, WHICH PRODUCED THE STEEL AND WERE THEREFORE CHARGED WITH THE CONTRIBUTION .

IT IS TO BE OBSERVED HOWEVER THAT THE APPLICANTS SUCCEEDED TO ALL THE LEGAL RELATIONSHIPS OF THEIR FORMER SUBSIDIARIES .

THEREFORE, WHILST THE APPLICANTS HAVE NOT EXPRESSLY INVOKED THE COMPLAINT OF DISCRIMINATION IN RESPECT OF THEIR FORMER SUBSIDIARIES - WHICH WOULD HAVE GONE AGAINST THEIR ARGUMENT ON THE CONCEPT OF AN UNDERTAKING - THEY NEVERTHELESS SUBSTANTIALLY REPRESENT THE POSITION IN WHICH THE SUBSIDIARY COMPANIES THEMSELVES WERE INTERESTED .

P . 345

IN THESE CIRCUMSTANCES THE OBJECTION OF INADMISSIBILITY IS BASED ON THE SIMPLE ISSUE OF THE FORMULATION OF THE COMPLAINT AND SHOULD THEREFORE BE DISMISSED .

IT IS APPROPRIATE THEREFORE TO TURN TO AN EXAMINATION OF THE SUBSTANCE OF THE CASE .

THE APPLICANTS MAINTAIN THAT AT THE TIME WHEN THE EQUALIZATION SCHEME WAS IN FORCE THEY WERE IN AN IDENTICAL SITUATION, AS REGARDS THEIR PRODUCTION, TO THAT OF COMPETING UNDERTAKINGS IN THE FORM OF A SINGLE LEGAL PERSON COMPRISING DIFFERENT BRANCHES .

HOWEVER, EVEN IF THIS ASSERTION IS FACTUALLY CORRECT AND IF IT BE ADMITTED THAT THE DIFFERENCE IN TREATMENT CLAIMED BROUGHT NOT INCONSIDERABLE DISADVANTAGES TO THE APPLICANTS IN RELATION TO THOSE OF THEIR COMPETITORS NOT SUBJECT TO EQUALIZATION CHARGES, THAT OF ITSELF IS NOT A SUFFICIENT GROUND FOR ADMITTING THE EXISTENCE OF A FORM OF DISCRIMINATION PROHIBITED BY THE TREATY .

FOR THE HIGH AUTHORITY TO BE ACCUSED OF DISCRIMINATION IT MUST BE SHOWN TO HAVE TREATED LIKE CASES DIFFERENTLY, THEREBY SUBJECTING SOME TO DISADVANTAGES AS OPPOSED TO OTHERS, WITHOUT SUCH DIFFERENTIATION BEING JUSTIFIED BY THE EXISTENCE OF SUBSTANTIAL OBJECTIVE DIFFERENCES .

ON THE OTHER HAND, IN THIS CASE, IN SPITE OF IDENTICAL CIRCUMSTANCES AS REGARDS PRODUCTION, THE APPLICANTS BY REASON OF THEIR LEGAL STRUCTURE INCORPORATING SEVERAL UNDERTAKINGS WERE NOT IN A SIMILAR POSITION TO THAT OF THEIR COMPETITORS WHO FORMED A SINGLE LEGAL ENTITY . THIS DIFFERENCE IS OF IMPORTANCE IN LAW AND IS THEREFORE CAPABLE OF JUSTIFYING DIFFERENT TREATMENT .

THUS THE ARGUMENTS ADVANCED BY THE APPLICANTS STRESSING THE CLOSE TIES BETWEEN THE PARENT COMPANY AND ITS SUBSIDIARIES, IN PARTICULAR BY REASON OF 'ORGANSCHAFT' ( INTER-GROUP ) CONTRACTS, WITH A VIEW TO DEMONSTRATING THE SIMILARITIES TO COMPANIES THE DIFFERENT BRANCHES OF WHICH WERE COMBINED IN A SINGLE LEGAL PERSON, ARE OF NO SIGNIFICANCE IN THE PRESENT CASES BECAUSE THEY CAN IN NO WAY ELIMINATE THE FUNDAMENTAL DIFFERENCE WHICH HAS BEEN DECLARED TO EXIST BETWEEN A GROUP OF UNDERTAKINGS AND AN UNDERTAKING CONSIDERED AS A SINGLE ENTITY .

THE PRINCIPLE RECOGNIZED BY THE COURT IN JOINED CASES 32 AND 33/58 ( REC . 1958-1959, P . 307 ) THAT ANY INTERVENTION BY THE HIGH AUTHORITY WHICH MADE THE COST OF PRODUCTION OF STEEL DEPENDENT UPON THE LEGAL, ADMINISTRATIVE OR FINANCIAL STRUCTURE OF INDUSTRIAL GROUPS WOULD BE ILLEGAL, SO FAR FROM SUPPORTING THE APPLICANTS' ARGUMENTS, AS THEY CLAIM, CONFLICTS WITH THEM . IN FACT, THE ABOVEMENTIONED DECISION OF THE COURT, CONFIRMING THE VALIDITY OF THE CRITERION OF THE LEGAL PERSON AND DECLARING THAT THE PARTICULAR STRUCTURES OF ECONOMIC GROUPS ARE OF NO CONSEQUENCE, HAS SETTLED, CLEARLY AND IN A WAY WHICH LEAVES NO ROOM FOR EXCEPTIONS, THE QUESTION WHETHER GROUP SCRAP COULD BE EQUATED WITH OWN RESOURCES OF ONE AND THE SAME UNDERTAKING .

P . 346

THIS CONCLUSION FLOWS LOGICALLY FROM THE CONCEPT OF AN UNDERTAKING USED FOR THE PURPOSES OF THE EQUALIZATION SCHEME AND IS ALSO JUSTIFIED BY THE PRACTICAL ADVANTAGES OF A SIMPLE AND CLEAR CRITERION . IT IS TRUE THAT SOME UNDERTAKING MIGHT HAVE FOUND THE USE OF A DIFFERENT CRITERION, TAKING ACCOUNT OF THE DIFFERENCES BETWEEN THE VARIOUS TYPES OF INDUSTRIAL GROUPS, MORE FAVOURABLE TO THEM . HOWEVER, IN VIEW OF THE INFINITE VARIATIONS, ACTUAL AND POSSIBLE, IN GROUP RELATIONS AND THE DIFFICULTIES WHICH WOULD ARISE IN MANY CASES IN MAKING A HARD AND FAST CLASSIFICATION OF GROUPS IN DIFFERENT CATEGORIES, IT MUST BE ADMITTED THAT A SYSTEM OF THIS KIND MIGHT HAVE GIVEN RISE IN PRACTICE TO SERIOUS UNCERTAINTIES, WOULD HAVE HINDERED THE SMOOTH WORKING OF THE EQUALIZATION SCHEME AND WOULD HAVE PROVIDED A SOURCE OF POSSIBLE DISCRIMINATION .

MOREOVER, IN ESTABLISHING FINANCIAL ARRANGEMENTS TO SAFEGUARD THE STABILITY OF THE MARKET, IT RESTS WITH THE HIGH AUTHORITY TO CHOOSE THE SYSTEM WHICH IT DEEMS MOST LIKELY TO SERVE THE COMMON INTERESTS . IT IS OPEN TO THE COURT TO CENSURE THIS CHOICE ONLY IF IT APPEARS THAT THE HIGH AUTHORITY HAS EXCEEDED THE OBJECTIVE LIMITS TO ITS ACTIVITY OUTLINED BY THE TREATY . THIS IS NOT SO IN THE PRESENT CASE .

IN THE CIRCUMSTANCES THE APPLICANTS HAVE NOT PROVED THAT THE CRITERION ADOPTED IN THE BASIC DECISIONS IS EITHER IRRELEVANT OR PURELY ARBITRARY OR THAT IN ITSELF IT INVOLVES DISCRIMINATION .

THEREFORE THE COMPLAINT OF DISCRIMINATION STATED BY THE APPLICANTS SHOULD BE DISMISSED .

II - SUBMISSION OF MISUSE OF POWERS

THE APPLICANT KLOCKNER COMPLAINS THAT THE DEFENDANT IS GUILTY OF A MISUSE OF POWERS BY DISMISSING THE APPLICANT'S REQUEST FOR EXEMPTION ON THE BASIS OF PURELY FORMAL LEGAL CONSIDERATIONS .

IN SUPPORT OF THIS SUBMISSION IT RELIES ON ARGUMENTS ALREADY PUT FORWARD IN SUPPORT OF THE SUBMISSION THAT THE TREATY WAS INFRINGED .

P . 347

HOWEVER, THESE ARGUMENTS IN NO WAY PROVE THAT IN TAKING THE DISPUTED DECISION THE HIGH AUTHORITY SOUGHT TO DO OTHER THAN APPLY THE BASIC DECISIONS CORRECTLY IN ACCORDANCE WITH THE TREATY .

THEREFORE THE SUBMISSION OF MISUSE OF POWERS INVOKED BY THE APPLICANT MUST BE DISMISSED .

III - OBJECTIONS OF ILLEGALITY RAISED AGAINST THE BASIC DECISIONS

IN ITS APPLICATION THE KLOCKNER COMPANY RAISED THE OBJECTION OF ILLEGALITY ON THE GROUNDS OF INFRINGEMENT OF ARTICLES 3 ( B ) AND 4 ( B ) AGAINST THE BASIC DECISIONS IN SO FAR AS THESE PUT THE APPLICANT IN AN UNFAVOURABLE POSITION IN RELATION TO ITS COMPETITORS SIMILARLY PLACED BY SUBJECTING TO THE LEVY DELIVERIES OF FERROUS SCRAP WITHIN THE KLOCKNER-WERKE AG GROUP .

A SIMILAR OBJECTION WAS ALSO RAISED BY THE APPLICANT HOESCH FOR THE FIRST TIME IN ITS REJOINDER . HOESCH HAS THEREFORE RAISED ITS OBJECTION TOO LATE AND IT IS ACCORDINGLY INADMISSIBLE .

MOREOVER WHAT HAS BEEN SAID AT I, 4 SUFFICES TO SHOW THAT THE OBJECTION RAISED BY KLOCKNER IS UNFOUNDED AND IT MUST THEREFORE BE DISMISSED .

THE APPLICANT HOESCH CONTENDS THAT THE BASIC DECISIONS WERE TAKEN WITHOUT REGARD TO THE MANDATORY RULES OF FORM IN ARTICLE 15 OF THE TREATY OR THE RULES ON COMPETENCE ON WHICH THE LEGALITY OF THE ACTION OF THE HIGH AUTHORITY DEPENDS .

HOWEVER, THE APPLICANT HAS NOT SHOWN THAT ITS ALLEGATION IS JUSTIFIED . IT HAS IN FACT LIMITED ITSELF TO ASSERTING IN GENERAL TERMS THAT THE WISHES OF THE COUNCIL OF MINISTERS AND THE CONTENT OF THE BASIC DECISIONS WERE DIVERGENT .

MOREOVER THE COURT FINDS NOTHING TO JUSTIFY THE ARGUMENT OF THE APPLICANT . THIS OBJECTION MUST THEREFORE ALSO BE DISMISSED AS UNFOUNDED .

Decision on costs

UNDER THE TERMS OF ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE OF THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS .

## Decision on costs

THE APPLICANTS HAVE FAILED IN THEIR APPLICATIONS .

THE APPLICANT HOESCH HAS CLAIMED THAT THE DEFENDANT SHOULD BE ORDERED TO PAY COSTS, EVEN IF ITS APPLICATION BE DISMISSED, ON THE GROUND THAT THE HIGH AUTHORITY BROUGHT ABOUT THIS DISPUTE BY ITS CONTRADICTORY AND INCONSISTENT ATTITUDE .

IN THIS CONNEXION IT IS TO BE OBSERVED THAT THIS APPLICATION WAS MADE AFTER THE COURT IN ITS JUDGMENT IN JOINED CASES 32 AND 33/58, CASE 42/58 AND JOINED CASES 42 AND 49/59 HAD ALREADY ANSWERED THE QUESTIONS FORMING THE FUNDAMENTAL POINTS IN DISPUTE IN THE PRESENT CASES . THE APPLICANT HOESCH IS THEREFORE UNJUSTIFIED IN ITS REQUEST .

THE APPLICANTS MUST THEREFORE BEAR THE COSTS .

Operative part

THE COURT

## Operative part

HEREBY :

1 . DISMISSES THE APPLICATIONS IN JOINED CASES 17 AND 20/61 AS UNFOUNDED;

2 . ORDERS THE APPLICANTS TO PAY THE COSTS .