Judgment — ECLI:EU:T:2010:54
Date: 2010-03-02
Language of the case: English
Court formation: Third Chamber
Subject matter: Environment;Pollution
Procedure: Action for damages - unfounded;Action for annulment - inadmissible
Origin: Luxembourg

summary of the pleas in law on which it is based. That statement must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the application, if necessary without any further information. In order to guarantee legal certainty and sound administration of justice, it is necessary, in order for an action to be admissible, that the essential legal and factual particulars relied on be indicated, at least in summary form, coherently and intelligibly in the application itself. More specifically, in order to satisfy those requirements, an application seeking compensation for damage caused by a Community institution must state the evidence from which the conduct which the applicant alleges against the institution can be identified, the reasons why the applicant considers that there is a causal link between the conduct and the damage it claims to have suffered, and the nature and extent of that damage (Case T‑19/01 Chiquita Brands and Others v Commission [2005] ECR II‑315, paragraphs 64 and 65; Case T‑279/03 Galileo International Technology and Others v Commission [2006] ECR II‑1291, paragraphs 36 and 37; Case T‑304/01 Abad Pérez and Others v Council and Commission [2006] ECR II‑4857, paragraph 44; Case T‑138/03 É.R. and Others v Council and Commission [2006] ECR II‑4923, paragraph 34; and the order of 27 May 2004 in Case T‑379/02 Andolfi v Commission, not published in the ECR, paragraphs 41 and 42). 133 The Court takes the view that the application satisfies those formal requirements and that the arguments of the Parliament and the Council in that regard, the majority of which concern the assessment of the soundness, and not the admissibility, of the application for damages, must be rejected. In the application, the applicant has adduced sufficient evidence to identify the conduct of the Community legislature which it criticises, the reasons why it takes the view that there is a causal link between that conduct and the harm which it claims to have suffered, and the nature and possible extent of that harm. That evidence has also enabled the Parliament and the Council to defend themselves properly in that regard by submitting arguments seeking, in reality, to show that the application for damages is unfounded. 134 As regards the alleged unlawful conduct of the Parliament and the Council, it should be pointed out that, in accordance with the requirements established in the case‑law (Case C‑352/98 P Bergaderm and Goupil v Commission [2000] ECR I‑5291, paragraph 39 et seq., and Case C‑198/03 P Commission v CEVA and Pfizer [2005] ECR I‑6357, paragraph 61 et seq.), the applicant has raised detailed arguments with a view to showing that there was a sufficiently serious infringement of several rules – and even of higher-ranking rules of law – designed to confer rights on individuals, such as the principle of equal treatment and the freedom of establishment. 135 As regards the harm suffered, first, in the light of the circumstances at the time when the application was lodged, that harm could not fail to have a future element since the contested directive was still in the process of being transposed into the national legal systems and the Member States had only just begun to prepare their NAPs and their legislation in relation to the first allocation period. Furthermore, in the light of the scope of the Member States with regard to the implementation of the allowance trading scheme in their territories by means of their NAPs (see paragraph 116 above), the applicant was unable to specify the exact extent of that future harm at the time at which it brought its action. In such particular circumstances, to which the applicant made reference, it is not essential to specify in the application, as a condition of admissibility, the exact extent of the harm suffered, and even less to specify the amount of compensation sought since that is possible, in any event, up to the reply stage, on the condition that the applicant pleads such circumstances and provides the information which makes it possible to assess the nature and extent of the harm suffered, thereby enabling the defendant to defend itself (see, to that effect, the orders in Andolfi v Commission, cited in paragraph 132 above, paragraphs 48 and 49 and the case‑law cited, and Case T‑376/04 Polyelectrolyte Producers Group v Council and Commission [2005] ECR II‑3007, paragraph 55). 136 Next, the applicant has put forward sufficient information to identify the damage which it will incur in the future, including the nature, extent and various components thereof, to satisfy the requirements laid down in Article 44(1)(c) of the Rules of Procedure. In its application the applicant referred, first, to the damage resulting from the additional costs incurred in having to employ staff to carry out the monitoring and reporting activities under Articles 14 and 15 of the contested directive. In addition, in its observations on the pleas of inadmissibility the applicant put forward a concrete estimate of those additional costs. Second, the applicant claimed that it suffered both material and non‑material damage as a result of the loss of market shares and the damage caused to its reputation in environmental matters by the failure to bring the competing non‑ferrous metals and chemical products sectors within the scope of the contested directive. Third, the applicant alleged, with the support of estimated figures (see paragraphs 80 and 81 above), that it suffered harm as a result of its situation as a ‘net buyer of allowances’ and the foreseeable rise in costs of those allowances which could potentially destroy its gross profit. Fourth, the applicant sought damages for the loss in profit resulting from the fact that it is impossible for it to implement its cross‑border reconstruction strategy. Consequently, the minimum conditions governing identification of the damage are satisfied in the present case. 137 Finally, as regards the causal link between the unlawful conduct and the damage, the applicant submitted in a sufficiently precise manner, in accordance with the logic of its reasoning, that the Member State did not have any discretion as regards the transposition into national law of the contested provisions and the resulting obligations for operators and that, consequently, any possible damage incurred by it would be attributable to the allegedly unlawful conduct of the Community legislature. In that regard, the arguments of the Parliament, the Council and the Commission that the applicant should have ‘established’ or ‘proved’ such a casual link in order to render the application admissible cannot be accepted, since such an assessment falls within the examination of the validity of that application, and not within that of its admissibility. 138 In the light of all of the foregoing considerations, the pleas of inadmissibility raised by the Parliament and the Council must be rejected in so far as they concern the application for damages. III – The soundness of the application for damages A – The requirements governing the non‑contractual liability of the Community 139 It is settled case‑law that the non-contractual liability of the Community for unlawful conduct on the part of its organs, within the meaning of the second paragraph of Article 288 EC, depends on fulfilment of a set of conditions, namely the unlawfulness of the conduct alleged against the institutions, the fact of damage and the existence of a causal link between that conduct and the damage complained of (see Case C‑243/05 P Agraz and Others v Commission [2006] ECR I‑10833, paragraph 26 and the case‑law cited therein; Case T‑333/03 Masdar (UK) v Commission [2006] ECR II‑4377, paragraph 59; Abad Pérez and Others v Council and Commission, cited in paragraph 132 above, paragraph 97; É.R. and Others v Council and Commission, cited in paragraph 132 above, paragraph 99; and the judgment of 12 September 2007 in Case T‑259/03 Nikolaou v Commission, not published in the ECR, paragraph 37). 140 Given the cumulative nature of those conditions, the action must be dismissed in its entirety where one of those conditions is not satisfied (see, to that effect, Abad Pérez and Others v Council and Commission, cited in paragraph 132 above, paragraph 99, and É.R. and Others v Council and Commission, cited in paragraph 132 above, paragraph 101 and the case‑law cited therein). 141 As regards the first of those conditions, there must be a sufficiently serious breach of a rule of law which is intended to confer rights on individuals (Bergaderm and Goupil v Commission, cited in paragraph 134 above, paragraph 42). In relation to the requirement that there must be a sufficiently serious breach, the decisive criterion for establishing that a breach of Community law is sufficiently serious is whether the Community institution concerned manifestly and gravely disregarded the limits on its discretion. It is solely where that institution has only considerably reduced, or even no, discretion, that the mere infringement of Community law may suffice to establish the existence of a sufficiently serious breach (Case C‑312/00 P Commission v Camar and Tico [2002] ECR I‑11355, paragraph 54; Joined Cases T‑198/95, T‑171/96, T‑230/97, T‑174/98 and T‑225/99 Comafrica and Dole Fresh Fruit Europe v Commission [2001] ECR II‑1975, paragraph 134; Abad Pérez and Others v Council and Commission, cited in paragraph 132 above, paragraph 98; and É.R. and Others v Council and Commission, cited in paragraph 132 above, paragraph 100). 142 It is first necessary to assess the soundness of the pleas of illegality raised by the applicant in the light of the criteria set out in paragraph 141 above. 143 In that regard, it must be pointed out, in the context of the present case, that a possible sufficiently serious breach of the rules of law at issue must be based on a manifest and serious failure to have regard for the limits of the broad discretion enjoyed by the Community legislature when exercising its powers on environmental issues under Article 174 EC and 175 EC (see, to that effect and by analogy, first, Joined Cases T‑125/96 and T‑152/96 Boehringer v Council and Commission [1999] ECR II‑3427, paragraph 74; Joined Cases T‑64/01 and T‑65/01 Afrikanische Frucht-Compagnie v Council and Commission [2004] ECR II‑521, paragraph 101 and the case‑law cited therein; and, second, Case T‑13/99 Pfizer Animal Health v Council [2002] ECR II‑3305, paragraph 166; and Joined Cases T‑74/00, T‑76/00, T‑83/00 to T‑85/00, T‑132/00, T‑137/00 and T‑141/00 Artegodanand Others v Commission [2002] ECR II‑4945, paragraph 201). The exercise of that discretionary power implies first, the need for the Community legislature to anticipate and evaluate ecological, scientific, technical and economic changes of a complex and uncertain nature and, second, the balancing and arbitration by that legislature of the various objectives, principles and interests set out in Article 174 EC (see, to that effect, Case C‑284/95 Safety Hi-Tech [1998] ECR I‑4301, paragraphs 36 and 37; Case C‑86/03 Greece v Commission [2005] ECR I‑10979, paragraph 88; and Arcelor Atlantique et Lorraine and Others, cited in paragraph 42 above, paragraphs 57 to 59; see also, by analogy, Chiquita Brands and Others v Commission, cited in paragraph 132 above, paragraph 228). In the contested directive, that is reflected in the establishment of a series of objectives and sub-objectives which are in part contradictory (see, to that effect, Arcelor Atlantique et Lorraine and Others, cited in paragraph 42 above, paragraphs 28 to 33; and Germany v Commission, cited in paragraph 114 above, paragraphs 121 to 125 and 136 to 139). 144 Consequently, it is necessary to assess whether the alleged infringement of the rules of law invoked by the applicant involves a manifest and grave disregard for the limits of the broad discretion which the Community legislature enjoyed when adopting the contested directive. 145 Given that the applicant’s arguments in support of the two first pleas of illegality overlap to a very large extent, it is appropriate to examine them together. B – The existence of a sufficiently serious breach of the right to property, of the freedom to pursue an economic activity and of the principle of proportionality 1. Arguments of the parties 146 The applicant submits that the contested provisions infringe its right to property and its freedom to pursue an economic activity, which constitute fundamental rights guaranteed by the Community legal order, as confirmed by Articles 16 and 17 of the Charter of Fundamental Rights of the European Union, proclaimed on 7 December 2000 in Nice (OJ 2000 C 364, p. 1). Mandatory measures that impose certain conditions on the ‘use of property’ are liable to restrict the exercise of the right to property and, where such measures prevent an individual from exercising that right, they encroach on the very substance of that right. 147 The applicant takes the view that the contested provisions encroach disproportionately on the substance of its right to property and its freedom to pursue an economic activity because they require the applicant to operate its plants under economic conditions which are unsustainable. First, those provisions have the effect of placing the applicant in a position of a ‘net buyer of allowances’ (see paragraphs 75 and 77 above) given that, in spite of its reduction efforts in the past, and unlike companies in other sectors, it has no technological potential to reduce further its CO2 emissions in the near future (see paragraphs 77 and 78 above). Second, in view of the particular competitive conditions in the steel sector (see paragraph 79 above), the applicant will no longer be able to pass on the increased production costs to its customers (see paragraph 80 above). Consequently, its production will become loss-making, and it will therefore be obliged either to continue to operate unprofitable and inefficient plants within the internal market or to close them and relocate them to countries which have no emission reduction obligations under the Kyoto Protocol. 148 In its reply, the applicant states that the contested directive leads to a distortion of competition on three levels. Firstly, whereas European production is subject to CO2 emission reduction constraints, which increase the cost of production, production costs in third countries remain unchanged, and are even decreasing because of projects forming part of the ‘clean’ development mechanism provided for in the Kyoto Protocol (see paragraph 5 above). Secondly, within the internal market, the rise in production costs varies by reason of the disparity in national reduction objectives and allocation policies. Thirdly, the production of only a few materials, including steel, is affected by the allowance trading scheme. In the applicant’s opinion, all materials should be affected in the same way, in proportion to the amount of CO2 emitted and taking into account both the production process and the life cycle of the product in question. 149 The applicant considers that the contested directive contains no incentive for producers to reduce their emissions. First, there is no incentive for technological innovation, since newly established installations receive allowances based on their actual needs, which leads to the continued operation of non-profitable installations. Second, the contested directive does not provide any recompense for emission reductions, including the considerable reductions made by the European steel sector in the past. On the contrary, allocations for inefficient installations scheduled for closure are revoked since those allowances cannot be transferred to installations established in another Member State (see paragraphs 83 to 85 above). Therefore, there is no incentive for pig iron and steel producers to decrease emissions or to relocate their production to more efficient, and thus more environmentally sound, installations. In the light of this serious infringement of its right to property, its freedom to pursue an economic activity and its freedom of establishment, the applicant also doubts whether the objective of environmental protection through a reduction in greenhouse gas emissions can be achieved as envisaged in the contested directive. As regards the steel sector, it is rather likely that in total there will be no reduction of emissions due to the continued operation of inefficient operations and the transfer of steel production to third countries. 150 According to the applicant, it results from those considerations demonstrating the infringement of its right to property, of its freedom to pursue an economic activity and its freedom of establishment, that the contested provisions also infringe the principle of proportionality. In accordance with that principle, the legality of Community acts and measures is subject to the condition that those acts and measures are appropriate and necessary for meeting the objectives legitimately pursued by the legislation in question. Similarly, the third paragraph of Article 5 EC requires that legal acts of the Community should not go beyond what is necessary to achieve the objectives of the EC Treaty. Moreover, where there is a choice among a number of appropriate measures, the least restrictive should be applied, and the burdens imposed should not be disproportionate to the objectives sought. However, the inclusion of pig iron and steel production installations in Annex I to the contested directive was, from the outset, not appropriate for meeting the objective of the contested directive, which is to contribute to reducing emissions and protecting the environment, and the contested provisions impose a heavy and disproportionate burden on the applicant, thus threatening its very existence (see paragraphs 147 to 149 above). 151 The Parliament and the Council dispute the assertion that the contested directive affects in a disproportionate manner the applicant’s right to property and freedom to pursue an economic activity. Even if the resulting obligations for the applicant constitute restrictions in that respect, those restrictions cannot be regarded as a disproportionate and intolerable interference with those rights in the light of the general interest pursued by the contested directive and by the allowance trading scheme, namely protection of the environment. 152 Therefore, they claim, the first and second pleas should be rejected as unfounded. 2. Findings of the Court 153 It should be noted, at the outset, that, although the right to property and the freedom to pursue an economic activity form part of the general principles of Community law, those principles do not constitute absolute prerogatives, but must be viewed in relation to their social function. Consequently, the exercise of the right to property and the right to pursue a trade or profession freely may be restricted, provided that those restrictions in fact correspond to objectives of general interest pursued by the Community and that they do not constitute, with regard to the aim pursued, a disproportionate and intolerable interference which infringes upon the very substance of the rights guaranteed (see, to that effect, Case C‑295/03 P Alessandrini and Others v Commission [2005] ECR I‑5673, paragraph 86 and the case‑law cited therein, and Chiquita Brands and Others v Commission, cited in paragraph 132 above, paragraph 220). 154 More specifically, in relation to the alleged infringement of the right to property, it should be noted that, apart from the very general claim that the contested provisions give rise to a situation in which the applicant is no longer able to exploit, in a profitable manner, its steel-production installations established within the internal market, the applicant has not made it clear to what extent its right to property in relation to certain tangible or intangible assets involved in its production process is actually affected or rendered meaningless as a result of the application or transposition into national law of those provisions. The applicant has also failed to indicate which production installations would be particularly affected by the contested provisions and why exactly those installations would be affected in the light of the individual situation of each of those installations in the territory within which they are established and in the light of the relevant NAP. In that regard, the applicant has merely stated, in vague terms, that it would not be able to close certain inefficient and non-profitable installations so as not to lose the emission allowances allocated to them, but it has failed to explain to what extent that lack of efficiency or profitability and the resulting economic difficulties are specifically attributable to the application of the contested provisions as such. According to its own assertions, those economic difficulties already existed well before the 2001 merger (see paragraph 30 above) and was one of the economic reasons behind that merger. 155 In addition, as regards the alleged violation of the right to property and the freedom to pursue an economic activity, taken together, the applicant has failed in both its written pleadings and at the hearing to explain in a plausible and substantiated manner how and to what extent, by reason of the implementation of the contested directive, it was likely to become a ‘net purchaser of emissions allowances’ unable to pass on its costs to its customers. The applicant did not claim that, during the first allocation period, which ended in 2007, it was obliged to purchase additional emissions allowances because of a possible allowance shortage in one of its production installations established in the internal market. On the contrary, at the hearing, in response to a question put by the Court, the applicant acknowledged that, in 2006, it had sold surplus allowances on the exchange market and made a profit of EUR 101 million, which was noted in the minutes of the hearing. Therefore, it cannot reasonably be claimed that, taken together, the contested provisions necessarily give rise to negative financial consequences which adversely affect the applicant’s right to property and its freedom to pursue an economic activity. 156 In addition, it should be noted that the applicant has not claimed, within the context of its application for damages, that some of its production installations within the internal market had suffered losses due to the application of the contested provisions and it failed to produce precise figures in relation to the changes in the profitability of those installations since the allowance trading scheme became operational. The applicant also failed to provide information, first, on the way in which each of those installations had adapted to the different objectives of reducing emissions in the Member States concerned, some of which, such as the Kingdom of Spain, even have the possibility of increasing emissions in accordance with Decision 2002/358 and the burden-sharing agreement, and, second, on the question whether the emissions allowance quota to which it was entitled for those installations on the basis of the various NAPs was sufficient or not. Finally, even assuming that the various NAPs and the national reduction objectives are liable to infringe the applicant’s rights, the latter has neither claimed nor shown that that infringement was attributable to the contested provisions as such and not to the national legislation which the Member States adopted in the exercise of their discretion with regard to the implementation of the contested directive under the third paragraph of Article 249 EC. 157 As regards the applicant’s argument that steel producers are unable, for technical and economic reasons, to reduce their CO2 emissions any further, it is sufficient to state that criterion 3 of Annex III to the contested directive requires the Member States, when determining the quantities of allowances to be allocated, to take account of the potential, including the technological potential, of activities covered by the allowance trading scheme to reduce emissions (see, to that effect, the Opinion of Advocate General Poiares Maduro in Arcelor Atlantique et Lorraine and Others, cited in paragraph 42 above, at point 57). It follows that, when allocating allowances to the various industrial sectors and to operators of installations within those sectors, the Member States have to take account of the reduction potential of all those sectors and operators, including that of the steel sector and of pig iron and steel producers. In addition, under criterion 7 of Annex III to the contested directive ‘[t]he [NAP] may accommodate early action [to reduce emissions]’, with the result that the Member States have at least the possibility of taking account of efforts to reduce emissions which have already been made within the sector and by the operators at issue. Consequently, the possible failure on the part of the Member State to take sufficient account of that reduction capacity in its legislation transposing the contested directive cannot be attributed to the contested provisions. 158 In those circumstances, it appears that the contested provisions cannot infringe the applicant’s right to property and its freedom to pursue a professional activity, or even that that alleged infringement is capable of causing it damage. It must therefore be concluded that the applicant has established neither a sufficiently serious breach or disproportionate restriction of those rights by the contested provisions nor that that alleged infringement may be the cause of the damage which it claims to have suffered. 159 In addition, in so far as the applicant alleges an infringement of the principle of proportionality as an independent plea of illegality, it is already apparent from the findings in paragraphs 154 to 158 above that it has failed to demonstrate the existence of the heavy and disproportionate burden which it claims to have incurred. Similarly, without its being necessary to examine the soundness of the claims concerning the various dysfunctions of the allowance trading scheme (see paragraphs 149 and 150 above), the applicant’s main argument that the participation of steel producers, as the largest proven industrial emitters of CO2, is unfit or inappropriate to contribute to the main objective of the contested directive, which is to protect the environment by reducing greenhouse gas emissions, must be rejected as being manifestly unfounded. Finally, in any event, the applicant has not established that the allowance trading scheme as such was manifestly inappropriate to achieve the goal of reducing CO2 emissions and that the Community legislature thus manifestly and gravely disregarded the limits on its broad discretion. 160 The pleas of illegality alleging a sufficiently serious breach of the right to property, of the freedom to pursue an economic activity and of the principle of proportionality must therefore be rejected as unfounded. C – The existence of a sufficiently serious breach of the principle of equal treatment 1. Arguments of the parties 161 The applicant submits that the contested provisions infringe the principle of equal treatment. 162 First, it argues, the competing non-ferrous metal and chemical product sectors are excluded from the scope of the contested directive for no objective reason, even though they are responsible for comparable, or even higher, CO2 emissions than the steel sector. In that regard, the applicant disputes the contention that the inclusion in the allowance trading scheme of the chemical products sector, with a large number of installations, would involve a substantial increase in the administrative complexity of the scheme. The need for an additional administrative effort as such cannot justify the serious distortion of competition, such as that at stake in the case at issue. Moreover, as was originally envisaged, large chemical plants for commodity products, which contribute significantly to total emissions, should have been included within the scope of the contested directive at the very least. With regard to the exclusion of the sector of non-ferrous metals such as aluminium (recital 15 in the preamble to the contested directive), no attempt whatsoever was made by the Parliament and the Council to justify this unequal treatment. Lastly, no alternative measures were imposed on these competing sectors to alleviate the abovementioned competitive distortions. Second, the fact of treating in the same way the steel and other sectors covered by Annex I to the contested directive without objective reasons being given infringes the principle of equal treatment, given that they are in different situations. The ‘unique lock-in situation’ of pig iron and steel producers (see paragraph 76 et seq. above) differentiates them from those of the other sectors, placing them in the position of a ‘natural loser’ among the participants of the allowance trading scheme. 163 In its reply, the applicant states that the sectors of non-ferrous metals and chemical products are comparable to the steel sector and that, as confirmed by the Commission in its merger practice, there is competition between those different sectors. Thus, major car manufacturers are increasingly replacing steel with aluminium for ‘external parts’, such as engines, bonnets, and doors. Moreover, steel cans are increasingly being replaced by aluminium cans and plastic bottles in the soft drinks beverages market. Furthermore, while the total amount of CO2 emissions of the steel sector is higher than that of the aluminium and the plastic sectors, that in itself does not suffice to differentiate those sectors from each other, given that other sectors with a lower level of emissions than the chemicals sector, namely the glass, pottery and building materials sectors, and the paper and printing sectors are also included in Annex I to the contested directive. It is precisely because of the comparability of those sectors that the Parliament proposed to include ‘installations for the production and processing of aluminium’ and ‘the chemical industry’ in the contested directive. Finally, the fact that the aluminium sector is indirectly affected by the contested directive through higher electricity prices is not sufficient to differentiate it from the steel sector, which suffers from the same effects. 164 In the applicant’s opinion, Article 24 of the contested directive cannot be relied on in this context. The unilateral inclusion, under that provision, of other activities and installations in the allowance trading scheme is only an option, and not an obligation, for the Member States and requires approval by the Commission, taking various criteria into account. In any case, such – uncertain – inclusion by the Member States of the sectors that are competitors of the steel sector was possible only from 2008 onwards and thus could not remedy an infringement of the principle of equal treatment in the first allocation period. Finally, there is no objective justification for this unequal treatment, given that the contested provisions are neither necessary nor proportionate in regard to the objective of environmental protection that is being pursued. 165 At the hearing and in its observations on the consequences to be drawn from the judgment in Arcelor Atlantique et Lorraine and Others (paragraph 42 above), the applicant reiterated and supplemented its arguments regarding the infringement of the principle of equal treatment. 166 The Parliament, Council and Commission conclude that this plea should be rejected, particularly as the Court of Justice has ruled conclusively to that effect in its judgment in Arcelor Atlantique et Lorraine and Others (paragraph 42 above). 2. Findings of the Court 167 It should be noted, at the outset, that this plea of illegality, which alleges a sufficiently serious breach of the principle of equal treatment, is divided into two parts: first, an allegation of unequal treatment of comparable situations and, second, an allegation of equal treatment of dissimilar situations. 168 As regards the first part, reference must be made to paragraph 25 et seq. of the judgment in Arcelor Atlantique et Lorraine and Others (paragraph 42 above), in which the Court of Justice held as follows: ‘Different treatment of comparable situations 25. A breach of the principle of equal treatment as a result of different treatment presumes that the situations concerned are comparable, having regard to all the elements which characterise them. 26. The elements which characterise different situations, and hence their comparability, must in particular be determined and assessed in the light of the subject-matter and purpose of the Community act which makes the distinction in question. The principles and objectives of the field to which the act relates must also be taken into account (see, to that effect, Case 6/71 Rheinmühlen Düsseldorf [1971] ECR 823, paragraph 14; Joined Cases 117/76 and 16/77 Ruckdeschel and Others [1977] ECR 1753, paragraph 8; Case C‑280/93 Germany v Council [1994] ECR I‑4973, paragraph 74; and Joined Cases C‑364/95 and C‑365/95 T. Port [1998] ECR I‑1023, paragraph 83). 27. In the present case, the validity of [the contested] [d]irective … must be assessed with respect to the inclusion of the steel sector in the scope of the directive and the exclusion from its scope of the chemical and non-ferrous metal sectors, to which … the plastics and aluminium sectors respectively belong. 28. Under Article 1 of [the contested] [d]irective …, the aim of the directive is to establish a … scheme for allowance trading. According to points 4.2 and 4.3 of the Green Paper [of 8 March 2000 on greenhouse gas emissions trading within the European Union], the Community’s intention was to introduce, by the directive, such a system at the level of companies, thus referring to economic activities. 29. According to recital 5 in the preamble to [the contested] [d]irective…, its objective is to establish that scheme in order to contribute to fulfilling the commitments of the Community and its Member States under the Kyoto Protocol, which aims to reduce greenhouse gas emissions in the atmosphere to a level that prevents dangerous anthropogenic interference with the climate system, with the ultimate objective of protection of the environment. 30. Community policy on the environment, to which the legislative act at issue in the main proceedings relates, and one of whose principal objectives is the protection of the environment, aims, in accordance with Article 174(2) EC, at a high level of protection and is based in particular on the precautionary principle, the principle that preventive action should be taken, and the polluter-pays principle (see Case C‑157/96 National Farmers’ Union and Others [1998] ECR I‑2211, paragraph 64, and Joined Cases C‑14/06 and C‑295/06 Parliament and Denmark v Commission [2008] ECR [I‑1649], paragraph 75 and the case-law cited). … 34. It follows that, in relation to the subject-matter of [the contested] [d]irective …, the objectives of that directive referred to in paragraph 29 above, and the principles on which Community policy on the environment is based, the different sources of greenhouse gas emissions relating to economic activities are in principle in a comparable situation, since all emissions of greenhouse gases are liable to contribute to dangerous interference with the climate system and all sectors of the economy which emit such gases can contribute to the functioning of the allowance trading scheme. 35. Furthermore, it should be pointed out, first, that recital 25 in the preamble to [the contested] [d]irective … states that policies and measures should be implemented across all sectors of the economy of the Union in order to generate substantial emissions reductions and, second, that Article 30 of [the contested] [d]irective … provides that a review is to be carried out with a view to including other sectors in the scope of the directive. 36. It follows that, as regards the comparability of the sectors in question from the point of view of [the contested] [d]irective …, the possible existence of competition between those sectors cannot constitute a decisive criterion … 37. Nor, … is the quantity of CO2 emitted by each sector essential for assessing their comparability, in view in particular of the objectives of [the contested] [d]irective … and the functioning of the allowance trading scheme, as described in paragraphs 31 to 33 above. 38. The steel, chemical and non-ferrous metal sectors are therefore, for the purposes of examining the validity of [the contested] [d]irective … from the point of view of the principle of equal treatment, in a comparable position while being treated differently. Disadvantage as a result of the different treatment of comparable situations 39. … [F]or the Community legislature to be accused of breaching the principle of equal treatment, it must have treated comparable situations differently, thereby subjecting some persons to disadvantages as opposed to others (see Joined Cases 17/61 and 20/61 Klöckner-Werke and Hoesch v High Authority [1962] ECR 325, 345; Case 250/83 Finsider v Commission [1985] ECR 131, paragraph 8; and Case C‑462/99 Connect Austria [2003] ECR I‑5197, paragraph 115). … 42. The subjection of certain sectors … to the … scheme of allowance trading involves for the undertakings concerned, first, an obligation to hold a permit to emit greenhouse gases and, second, an obligation to surrender allowances equal to the total emissions of their installations during a specified period, on pain of financial penalties. If the emissions from an installation exceed the quantities allocated to the operator concerned under a national allowance allocation plan, the operator is obliged to obtain additional allowances by means of the allowance trading scheme. 43. By contrast, there are no such legal obligations, aimed at the reduction of greenhouse gas emissions, at Community level for operators of installations not covered by Annex I to [the contested] [d]irective … Consequently, the inclusion of an economic activity in the scope of [the contested] [d]irective … creates a disadvantage for the operators concerned in relation to those carrying on activities not so included. 44. Even if … being subject to such a scheme does not necessarily and systematically entail unfavourable economic consequences, the existence of a disadvantage cannot be denied for that reason alone, since the disadvantage to be taken into account from the point of view of the principle of equal treatment may also be such as to affect the legal situation of the person concerned by a difference in treatment. 45. Moreover, … the disadvantage suffered by operators of installations in the sectors subject to [the contested] [d]irective … cannot be offset by national measures not determined by Community law. Justification for different treatment 46. The principle of equal treatment will not, however, be infringed if the different treatment of the steel sector, on the one hand, and the chemical and non-ferrous metal sectors, on the other, is justified. 47. A difference in treatment is justified if it is based on an objective and reasonable criterion, that is, if the difference relates to a legally permitted aim pursued by the legislation in question, and it is proportionate to the aim pursued by the treatment (see, to that effect, Case 114/76 Bela-Mühle Bergmann [1977] ECR 1211, paragraph 7; Case 245/81 Edeka Zentrale [1982] ECR 2745, paragraphs 11 and 13; Case C‑122/95 Germany v Council [1998] ECR I‑973, paragraphs 68 and 71; and Case C‑535/03 Unitymark and North Sea Fishermen’s Organisation [2006] ECR I‑2689, paragraphs 53, 63, 68 and 71). 48. Since a Community legislative act is concerned, it is for the Community legislature to demonstrate the existence of objective criteria put forward as justification and to provide the Court with the necessary information for it to verify that those criteria do exist (see, to that effect, Joined Cases 124/76 and 20/77 Moulins et Huileries de Pont-à-Mousson and Providence agricole de la Champagne [1977] ECR 1795, paragraph 22, and Case C‑122/95 Germany v Council, paragraph 71). … 57. The Court acknowledges that, in the exercise of the powers conferred on it, the Community legislature has a broad discretion where its action involves political, economic and social choices and where it is called on to undertake complex assessments and evaluations (see Case C‑344/04 IATA and ELFAA [2006] ECR I‑403, paragraph 80). In addition, where it is called on to restructure or establish a complex system, it is entitled to have recourse to a step-by-step approach (see, to that effect, Case 37/83 Rewe-Zentrale [1984] ECR 1229, paragraph 20; Case C‑63/89 Assurances du crédit v Council and Commission [1991] ECR I‑1799, paragraph 11; and Case C‑233/94 Germany v Parliament and Council [1997] ECR I‑2405, paragraph 43) and to proceed in the light of the experience gained. 58. However, even where it has such a discretion, the Community legislature is obliged to base its choice on objective criteria appropriate to the aim pursued by the legislation in question (see, to that effect, Case 106/81 Kind v EEC [1982] ECR 2885, paragraphs 22 and 23, and [Case 106/83] Sermide [[1984] ECR 4209], paragraph 28), taking into account all the facts and the technical and scientific data available at the time of adoption of the act in question (see, to that effect, Case C‑284/95 Safety Hi-Tech [1998] ECR I‑4301, paragraph 51). 59. When exercising its discretion, the Community legislature must, in addition to the principal objective of protecting the environment, fully take into account all the interests involved (see, concerning measures relating to agriculture, Joined Cases C‑96/03 and C‑97/03 Tempelman and van Schaijk [2005] ECR I‑1895, paragraph 48, and Case C‑504/04 Agrarproduktion Staebelow [2006] ECR I‑679, paragraph 37). In examining the burdens associated with various possible measures, it must be considered that, even if the importance of the objectives pursued is such as to justify even substantial negative economic consequences for certain operators (see, to that effect, Case C‑331/88 Fedesa and Others [1990] ECR I‑4023, paragraphs 15 to 17, and Case C‑86/03 Greece v Commission [2005] ECR I‑10979, paragraph 96), the Community legislature’s exercise of its discretion must not produce results that are manifestly less appropriate than those that would be produced by other measures that were also suitable for those objectives. 60. In the present case, it is common ground, first, that the allowance trading scheme introduced by [the contested] [d]irective … is a novel and complex scheme whose implementation and functioning could have been disturbed by the involvement of too great a number of participants, and, second, that the original definition of the scope of the [contested] directive was dictated by the objective of attaining the critical mass of participants necessary for the scheme to be set up. 61. In view of the novelty and complexity of the scheme, the original definition of the scope of [the contested] [d]irective … and the step-by-step approach taken, based in particular on the experience gained during the first stage of its implementation, in order not to disturb the establishment of the system were within the discretion enjoyed by the Community legislature. 62. It should be observed here that, while the legislature could lawfully make use of such a step-by-step approach for the introduction of the allowance trading scheme, it is obliged, in particular in view of the objectives of [the contested] [d]irective … and of Community policy in the field of the environment, to review the measures adopted, inter alia as regards the sectors covered by [the contested] [d]irective …, at reasonable intervals, as is, moreover, provided for in Article 30 of the directive. 63. However, … the Community legislature’s discretion as regards a step-by-step approach could not, in the light of the principle of equal treatment, dispense it from having recourse, for determining the sectors it thought suitable for inclusion in the scope of [the contested] [d]irective … from the outset, to objective criteria based on the technical and scientific information available at the time of adoption of the directive. 64. As regards, first, the chemical sector, it may be seen from the history of [the contested] [d]irective … that that sector has an especially large number of installations, of the order of 34 000, not only in terms of the emissions they produce but also in relation to the number of installations currently included in the scope of the [contested] directive, which is of the order of 10 000. 65. The inclusion of that sector in the scope of [the contested] [d]irective … would therefore have made the management of the allowance trading scheme more difficult and increased the administrative burden, so that the possibility that the functioning of the scheme would have been disturbed at the time of its implementation as a result of that inclusion cannot be excluded. Moreover, the Community legislature was able to take the view that the advantages of excluding the whole sector at the start of the implementation of the allowance trading scheme outweighed the advantages of including it for attaining the objective of [the contested] [d]irective … It follows that the Community legislature has shown to the requisite legal standard that it made use of objective criteria to exclude the entire chemical sector from the scope of [the contested] [d]irective … in the first stage of implementation of the allowance trading scheme. 66. The argument … that the inclusion in the scope of [the contested] [d]irective … of undertakings in that sector emitting a quantity of CO2 above a certain threshold would not have caused administrative problems cannot call into question the above assessment. … 69. In the light of the foregoing and having regard to the step-by-step approach on which [the contested] [d]irective … is based, in the first stage of implementation of the allowance trading scheme, the difference in treatment between the chemical sector and the steel sector may be regarded as justified. 70. As regards, second, the non-ferrous metal sector, … [at the time of] drafting and adopting [the contested] [d]irective …, th[e] direct emissions from that sector amounted to 16.2 million tonnes of CO2 in 1990, while the steel sector emitted 174.8 million tonnes of CO2. 71. In view of its intention of defining the scope of [the contested] [d]irective … in such a way as not to upset the administrative feasibility of the allowance trading scheme in its initial stage by involving too many participants, the Community legislature was not required to have recourse solely to the method of introducing, for each sector of the economy that emitted CO2, a threshold for emissions in order to attain its objective. Thus, in circumstances such as those in which [the contested] [d]irective … was adopted, it could, when introducing the scheme, legitimately delimit its scope by means of a sectoral approach without exceeding the bounds of its discretion. 72. The difference in the levels of direct emissions between the two sectors concerned is so substantial that the different treatment of those sectors may, in the first stage of implementation of the allowance trading scheme and in view of the step-by-step approach on which [the contested] [d]irective … is based, be regarded as justified without there having been any need for the Community legislature to take into consideration the indirect emissions attributable to the various sectors. 73. Accordingly, the Community legislature did not infringe the principle of equal treatment by treating comparable situations differently when it excluded the chemical and non-ferrous metal sectors from the scope of [the contested] [d]irective ...’ 169 Given that the reasoning of the Court of Justice in the aforecited judgment provides a full answer to the first part of this plea of illegality, alleging a lack of justification for different treatment as between the steel sector and the non-ferrous metal and chemical products sectors, it is necessary to reject that part of the plea as unfounded. 170 As regards the second part of the plea, alleging a lack of justification for equal treatment of the steel sector and the other sectors covered by Annex I to the contested directive, while, unlike those other sectors, the steel sector would be a ‘natural loser’ as it is in a ‘unique lock-in situation’, suffice it to note that, from the point of view of, first, the overall objective of protecting the environment by reducing greenhouse gas emissions and, second, the polluter-pays principle, all those sectors are in a comparable situation (see, to that effect and by analogy, Arcelor Atlantique et Lorraine and Others, cited in paragraph 42 above, paragraphs 29 to 38). In addition, it is clear from paragraphs 112 to 116 above that the applicant has not shown that the steel sector was in a particular situation which distinguishes it from all the other sectors covered by Annex I to the contested directive (see also, to that effect, the Opinion of Advocate General Poares Maduro in Arcelor Atlantique et Lorraine and Others, cited in paragraph 157 above, point 57). 171 Consequently, the plea of illegality, based on a sufficiently serious breach of the principle of equal treatment, must be rejected as unfounded in its entirety. D – The existence of a sufficiently serious breach of the freedom of establishment 1. Arguments of the parties 172 The applicant submits that the contested provisions severely infringe its freedom of establishment under the first paragraph of Article 43 EC. 173 The prohibition of restrictions on the freedom of establishment not only applies to State measures but, as a legal principle, is also binding on the Community. Articles 39 EC and 43 EC seek to implement the fundamental principle contained in Article 3(1)(c) EC, in which it is stated that, for the purposes set out in Article 2 EC, the activities of the Community are to include the abolition, as between Member States, of obstacles to the free movement of persons and services. In addition, the Community institutions themselves must also have due regard to freedom of trade as a fundamental principle of the common market, of which the freedom of establishment is a derivative. The applicant states that Article 43 EC guarantees that companies can choose freely the location of their production within the common market, in accordance with economic criteria. Similarly, that fundamental freedom also prohibits the introduction of obstacles in the Member State of origin which are aimed at preventing relocation of undertakings to another Member State, as the rights guaranteed by Article 43 EC would otherwise be rendered meaningless. 174 According to the applicant, however, the contested provisions affect its right to transfer production from a less efficient installation in one Member State to a more efficient installation in another Member State by not guaranteeing a corresponding transfer of the allowances allocated to the production capacity which is to be closed and transferred (see paragraph 149 et seq. above). This forces the applicant, without objective justification, to continue to operate less efficient plants solely in order not to lose the corresponding allowances. That restriction on its freedom of establishment is disproportionate, bearing in mind the inappropriateness of the contested directive for the purpose of achieving the objective of environmental protection that is pursued (see paragraph 149 above), and the vital importance of exercising the freedom of establishment for the completion of the internal market. 175 The Parliament and the Council submit that this plea should be rejected. 2. Findings of the Court 176 By this plea the applicant essentially claims that, in the light of the freedom of establishment within the meaning of Article 43 EC, read in conjunction with Article 3(1)(c) EC, the broad discretion of the Community legislature under Articles 174 EC and 175 EC (see paragraph 143 above) is restricted to such a point that, in the context of the contested directive, which was adopted pursuant to Article 175(1) EC, it was not lawfully in a position to be able to refuse to resolve, by itself, the problem of the free cross-border transfer of emission allowances within a group of undertakings, and instead to reserve to the Member States a broad scope, for the purposes of transposing that directive, resulting in the adoption of divergent national rules liable to give rise to unlawful infringements of the freedom of establishment. 177 In that regard, it is settled case‑law that the Community institutions must respect, in the same way as the Member States, the fundamental freedoms, such as the freedom of establishment, which serve to achieve one of the essential objectives of the Community, namely the completion of the internal market provided for in Article 3(1)(c) EC (see, to that effect, Case 37/83 Rewe‑Zentrale [1984] ECR 1229, paragraph 18). 178 However, it does not follow from that general obligation that the Community legislature is required to regulate the area at issue in such a way that the Community legislation, particularly where that legislation takes the form of a directive within the meaning of the third paragraph of Article 249 EC, must provide an exhaustive and definitive solution to certain problems raised from the perspective of completing the internal market or effect a complete harmonisation of national legislation in order to exclude any conceivable barriers to intra-Community trade. Where the Community legislature is called on to restructure or establish a complex scheme, such as the allowance trading scheme, it is entitled to have recourse to a step-by-step approach (see, to that effect, Arcelor Atlantique et Lorraine and Others, cited in paragraph 42 above, paragraph 57) and to carry out only a progressive harmonisation of the national legislation at issue, as the implementation of such measures is generally difficult inasmuch as it supposes, on the part of the competent Community institutions, the elaboration, by means of diverse and complex national provisions, of common rules consistent with the objectives defined by the EC Treaty and receiving the approval of a qualified majority of the members of the Council (see, to that effect, Rewe-Zentrale, cited in paragraph 177 above, paragraph 20; Case C‑63/89 Assurances du credit v Council and Commission [1991] ECR I‑1799, paragraph 11; Case C‑233/94 Germany v Parliament and Council [1997] ECR I‑2405, paragraph 43; Case C‑166/98 Socridis [1999] ECR I‑3791, paragraph 26; and C‑221/05 Sam Mc Cauley Chemists (Blackpool) and Sadja [2006] ECR I‑6869, paragraph 26). That is also the case for Community legislation in the area of protection of the environment under Articles 174 EC and 175 EC. 179 In addition, it should be noted, first, that, under the third paragraph of Article 249 EC, a directive is binding upon each Member State to which it is addressed only as to the result to be achieved, but leaves to the national authorities the choice of form and methods, which logically implies that the Member States are left with the necessary discretion to define transposition measures (see, to that effect, Case C‑275/06 Promusicae [2008] ECR I‑271, paragraph 67) and, second, that recital 30 in the preamble to the contested directive refers to the principle of subsidiarity laid down in the second paragraph of Article 5 EC. According to that principle, in areas which do not fall within its exclusive competence, the Community is to take action only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved at Community level. It is apparent from Articles 174 EC to 176 EC that, in the area of protection of the environment, the Community and the Member States have shared competence. Therefore, the Community rules do not seek to effect complete harmonisation in that area and Article 176 EC allows the Member States to introduce more stringent protective measures, subject only to the conditions that they should be compatible with the EC Treaty and that they should be notified to the Commission (see, to that effect, Case C‑6/03 Deponiezweckverband Eiterköpfe [2005] ECR I‑2753, paragraph 27 and the case‑law cited therein). 180 In accordance with those principles, the contested directive does not provide for complete harmonisation at Community level of the conditions underlying the establishment and functioning of the allowance trading scheme. Provided that they respect the rules of the EC Treaty, the Member States enjoy broad discretion regarding the implementation of that scheme, in particular in the context of the elaboration of their NAPs and their independent decisions on emission allowance allocation under Article 9(1) and Article 11(1) of the contested directive (Germany v Commission, cited in paragraph 114 above, paragraphs 102 to 106). Consequently, the mere fact that the Community legislature left open a particular question falling within the scope of the contested directive and of a fundamental freedom, in such a way that it is the task of the Member States to regulate that issue in the exercise of their discretion, albeit in accordance with the higher-ranking rules of Community law, does not in itself justify that omission being classified as being contrary to the rules of the EC Treaty (see, to that effect, the Opinion of Advocate General Jacobs in Case C‑377/98 Netherlands v Parliament and Council [2001] ECR I‑7079, I-7084, points 87 and 88). That is made all the more evident by the fact that the Member States are required, pursuant to their duty of genuine cooperation under Article 10 EC, to ensure the effectiveness of directives (see, in that sense, Case C‑40/04 Yonemoto [2005] ECR I‑7755, paragraph 58), which also implies that they are required to interpret national law in the light of the objectives and principles underlying the directive at issue (see, in relation to the principle of interpretation in the light of a directive, Case C‑321/05 Kofoed [2007] ECR I‑5795, paragraph 45). 181 In addition, both the Community legislature, when adopting a directive, and the Member States, when transposing that directive into national law, are required to ensure that the general principles of Community law are respected. Thus, it is apparent from settled case‑law that the requirements flowing from the protection of the general principles recognised in the Community legal order, which include fundamental rights, are also binding on Member States when they implement Community rules, and that consequently they are bound, as far as possible, to apply the rules in accordance with those requirements (see Case C‑540/03 Parliament v Council [2006] ECR I‑5769, paragraph 105 and the case‑law cited therein; see also, to that effect, Case C‑101/01 Lindqvist [2003] ECR I‑12971, paragraphs 84 to 87). 182 The Court takes the view that those principles apply by analogy to the fundamental freedoms of the EC Treaty. The contested directive, and in particular Articles 9(1) and 11(1) thereof, grants the Member States discretion and, in principle, that discretion is broad enough to enable them to apply the rules of that directive in conformity with the requirements resulting from the protection of the fundamental rights and fundamental freedoms under the EC Treaty. In addition, since the implementation of the contested directive is subject to review by the national courts, it is incumbent upon those courts, if they encounter difficulties relating to the interpretation or validity of the directive, to refer a question to the Court of Justice for a preliminary ruling in the circumstances set out in Article 234 EC (see, to that effect and by analogy, Parliament v Council, cited in paragraph 181 above, paragraphs 104 and 106). 183 Consequently, the authorities and the courts in the Member States must not only interpret their national law in a manner consistent with the contested directive but also ensure that they do not rely on an interpretation of the latter which would be in conflict with the fundamental rights protected by the Community legal order, with the other general principles of Community law or with the fundamental freedoms of the EC Treaty, such as the freedom of establishment (see, to that effect and by analogy, Lindqvist, cited in paragraph 181 above, paragraph 87; Case C‑305/05 Ordre des barreaux francophones et germanophone and Others [2007] ECR I‑5305, paragraph 28; and Promusicae, cited in paragraph 179 above, paragraph 68). 184 It follows from all of the foregoing that the Community legislature cannot be accused of having failed to resolve in an exhaustive and definitive manner, within the framework of a directive, a problem coming within the scope of the freedom of establishment, where that directive grants the Member States a discretion which enables them fully to respect the rules of the EC Treaty and the general principles of Community law. 185 In the light of the above considerations, the Court finds it appropriate in the present case to examine whether the contested directive may be interpreted and transposed by the Member States in conformity with the freedom of establishment under Article 43 EC (see, to that effect, Joined Cases C‑465/00, C‑138/01 and C‑139/01 Österreichischer Rundfunk and Others [2003] ECR I‑4989, paragraphs 68 and 91, and Joined Cases C‑482/01 and C‑493/01 Orfanopoulos and Others [2004] ECR I‑5257, paragraphs 109 and 110). 186 As submitted by the applicant, the contested directive does not provide for any specific rule offering the operators of installations subject to the allowance trading scheme the possibility of transferring the allowance quota allocated to one installation, following its closure, to another installation established in another Member State and belonging to the same group of companies. 187 However, it follows from Article 12(1), read in conjunction with Article 3(a) and (g), of the contested directive that ‘Member States shall ensure that allowances can be transferred between … [natural and legal] persons within the Community’. In addition, Article 12(2) of the contested directive requires that ‘Member States … ensure that allowances issued by a competent authority of another Member State are recognised for the purpose of meeting an operator’s obligations [to surrender unused allowances] under paragraph 3’ of that article. It follows, first, in accordance with the objective set out in recital 5 in the preamble to the contested directive, which provides for the creation of an ‘efficient European market in greenhouse gas emission allowances’, that the exchange market established by the contested directive has a Community dimension and, second, that that market is founded on the principle of the free cross-border transfer of emission allowances between natural and legal persons. 188 In the absence of the free cross-border transfer of emission allowances within the meaning of Article 12(2) and (3) of the contested directive, read in conjunction with Article 3(a) thereof, the efficiency and performance of the allowance trading scheme for the purposes of Article 1 of the contested directive would be seriously disrupted. It is for that reason that Article 12(2) of the contested directive imposes on the Member States the general obligation to ‘ensure’ that that freedom is made effective in the relevant national legislation. Conversely, it should be noted that the contested directive does not provide for any restriction on cross-border transfers of allowances between legal persons within the same group of companies, irrespective of where their registered office and/or principal place of business are located within the internal market. In the light of the aforecited provisions of the contested directive, it cannot therefore be concluded that that directive contains an unlawful restriction on the fundamental freedoms of the EC Treaty, including the freedom of establishment, or that it encourages the Member States not to respect those freedoms. 189 On the contrary, as the applicant itself states in its written pleadings, the problem which it raises originates in the partially divergent legislation adopted by the Member States when transposing the contested directive, without being able to target its claim at one specific provision thereof or at the contested provisions. In that regard, it should be noted that the Member States are required, within the bounds of the freedom left to them by the third paragraph of Article 249 EC, to choose the most appropriate forms and methods to ensure the effectiveness of directives (Yonemoto, cited in paragraph 180 above, paragraph 58) and to apply their national law in conformity with those directives and the fundamental freedoms of the EC Treaty, such as the freedom of establishment (see, to that effect and by analogy, Lindqvist, cited in paragraph 181 above, paragraph 87, and Promusicae, cited in paragraph 179 above, paragraph 68). 190 Therefore, without there being any need to rule on the question as to whether or not the relevant national laws, which are at the origin of the fact that the applicant cannot freely transfer its allowance quotas between its installations established in different Member States, are consistent with the freedom of establishment under Article 43 EC, it must be concluded that such a restriction on that freedom cannot be attributed to the contested directive on the sole ground that the latter does not explicitly prohibit such practice on the part of the Member States. A fortiori, the Community legislature cannot be held responsible for having failed in that respect, in a manifest and grave manner, to have regard to the limits of its discretion under Article 174 EC in conjunction with Article 43 EC. 191 Accordingly, there is no need to examine the validity of the arguments raised by the parties concerning the possibility for the applicant to benefit from the national rules providing all new entrants with free access to the allowances in the reserve. Although Article 11(3) of the contested directive, in conjunction with criterion 6 of Annex III thereto, requires that the Member States take account of the need to make access to allowances available to new entrants, the contested directive does not provide, as such, for the establishment of such a reserve. Thus, the possible inadequacy of that access to offset the loss of allowances as a result of the closure of an installation also cannot be attributed to the Community legislature. 192 Consequently, the plea of illegality alleging a sufficiently serious breach of the freedom of establishment must be rejected as unfounded. E – The existence of a sufficiently serious infringement of the principle of legal certainty 1. Arguments of the parties 193 The applicant submits that the contested provisions infringe the principle of legal certainty. Community legislation, including directives, must be certain, clear and precise, and its application must be foreseeable by individuals so that they know without ambiguity what are their rights and obligations and may act accordingly. These requirements must be observed all the more strictly in the case of legislation which is liable to entail financial consequences. 194 In the opinion of the applicant, the contested provisions infringe the principle of legal certainty for two reasons. First, in the absence of any cap or control mechanism concerning the price of the allowances provided for by the contested directive, the applicant, as a ‘net buyer of allowances’ by reason of its inability to reduce its CO2 emissions, will be required to purchase allowances at ‘prices which are completely unpredictable’, estimated at between EUR 20 and EUR 60 per allowance (see paragraph 80 et seq. above). Second, the contested directive provides no rule which guarantees the transfer of allowances initially allocated to an installation earmarked for closure to an installation of the same group established in another Member State. Member States, however, have a strong interest in cancelling allowances for installations to be closed, given that such closures allow them to reduce further their CO2 emissions in order to meet their respective reduction targets under Decision 2002/358. The resulting legal uncertainty makes it impossible for the applicant to draw up any long-term business plans and to move forward with its restructuring strategy, consisting of transferring production to its most profitable installations. Given that that strategy formed the very rationale for the merger in 2001 (see paragraph 30 above), the contested directive also infringes the principle of the protection of legitimate expectations. In its reply, the applicant states that long-term planning of investments and economic projects has become impossible, owing in particular to the divergences in emissions reduction objectives and measures among the Member States. That uncertainty is confirmed by the significant price increase for CO2 allowances. Thus, between February 2005 and March 2006, the price of CO2 allowances increased from around EUR 6 to more than EUR 26. Furthermore, it is unclear how the future allocation of allowances will develop, in particular as regards the second allocation period and the periods thereafter. 195 The Parliament and the Council contend that this plea should be rejected. 2. Findings of the Court 196 By this plea the applicant essentially submits that the contested provisions are not sufficiently clear and precise in so far as they involve a significant financial burden for it, which makes it impossible for it to plan its economic decisions. In that regard, the Community legislature should have provided, first, for a cap or control mechanism for the price of emission allowances and, second, for a special rule guaranteeing the cross‑border transfer of allowances between different installations of the same group of companies. 197 In so far as the applicant reiterates, in the second part of the plea, its arguments concerning the alleged infringement of the freedom of establishment, it follows from the findings in paragraphs 176 to 192 above that those arguments also cannot be upheld in relation to the claim that there has been a sufficiently serious infringement of the principle of legal certainty. Therefore, the second part of this plea must be rejected as unfounded. 198 As regards the first part of this plea, reference should first be made to the case‑law according to which the principle of legal certainty requires, inter alia, that rules of law be clear, precise and predictable as regards their effects, in particular where they may have unfavourable consequences for individuals and undertakings (see, to that effect, Case C‑17/03 VEMW and Others [2005] ECR I‑4983, paragraph 80 and the case‑law cited therein). 199 Next, it should be pointed out in that regard that the contested directive does not contain any provisions governing the extent of the financial consequences which may result from both a possible insufficiency of allowances allocated to an installation and the price of those allowances, since that price is determined exclusively by the market forces which came into being following the establishment of the allowance trading scheme, which, pursuant to Article 1 of the contested directive, seeks to ‘promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner’. In the light of the findings in paragraphs 178 to 184 above, the Community legislature was not required to adopt specific provisions in that regard and thereby to restrict the scope of the Member States in relation to the transposition of the contested directive. 200 On the contrary, regulation at Community level of the prices of allowances might thwart the main objective of the contested directive, which is to reduce greenhouse gas emissions through an efficient allowance trading scheme in which the cost of emissions and investments made to reduce such emissions is essentially determined by market forces (recital 5 in the preamble to the contested directive). Consequently, in the event of an insufficiency of allowances, the incentive for operators to reduce, or not to reduce, their greenhouse gas emissions will depend on a complex economic decision taken in the light, first, of the price of emission allowances available on the exchange market and, second, of the costs of possible measures to reduce emissions which may aim either to reduce production or to invest in more efficient methods of production in terms of energy output (recital 20 in the preamble to the contested directive; see also, to that effect, Germany v Commission, cited in paragraph 114 above, paragraph 132 et seq.). 201 In such a scheme, the increase in the cost of emissions and, consequently, in the price of allowances, which depends on a series of economic parameters, cannot be regulated in advance by the Community legislature without reducing, or even completely removing, the economic incentives which constitute its very basis and thereby adversely affecting the effectiveness of the allowance trading scheme. In addition, the establishment of such a scheme, including its economic premises, in order to comply with the obligations resulting from the Kyoto Protocol, comes within the broad discretion granted to the Community legislature under Article 174 EC (see paragraph 143 above) and constitutes, in itself, a legitimate and appropriate choice on the part of the latter and the validity of which as such has not been contested by the applicant. 202 In addition, it is on the basis of that legitimate choice that the Community legislature based the allowance trading scheme on the premise that, under Article 9(1) and Article 11(1) of the contested directive, it is the task of the Member States to decide, on the basis of their NAPs and in the exercise of the discretion granted to them in that regard, on the total quantity of allowances to be allocated and the individual allocation of those allowances to the installations established in their territory (see, to that effect, Germany v Commission, cited in paragraph 114 above, paragraphs 102 to 106). In addition, that decision is subject only to a restricted initial review by the Commission, pursuant to Article 9(3) of the contested directive, particularly in the light of the criteria set out in Annex III thereto (order in Case T‑387/04 EnBW Energie Baden‑Württemberg v Commission [2007] ECR II‑1195, paragraph 104 et seq.). Therefore, the variations to which the objectives and emission reduction measures of the various Member States will be subject, which are the result of their obligations under the Kyoto Protocol, as reflected in the burden sharing agreement laid down in Decision 2002/358 and, consequently, the uncertainty regarding the total quantity and the individual quantities of allowances to be allocated to the different industrial sectors and to operators on the basis of the various NAPs, cannot be attributed to the contested provisions as such. 203 Finally, the applicant has not specifically called into question the clarity and precision of the other contested provisions in order to show that it was not in a position to establish unambiguously its resulting rights and obligations. The need to have an emissions permit under Article 4 of the contested directive, the obligation to surrender within the meaning of Article 6(2)(e), read in conjunction with Article 12(3), and the penalties laid down in Article 16(2), (3) and (4) of that directive constitute provisions which are sufficiently clear, precise and foreseeable as to their effects, the effective scope of which depends only on the quantity of free allowances made available to operators or the price of the quotas available on the exchange market. As regards that latter aspect, it should be noted that the fact that it is not possible to predict how the exchange market will develop constitutes an element which is inherent and inseparable from the economic mechanism characterising the allowance trading scheme, which is subject to the classic rules of supply and demand, characteristic of a free and competitive market, in accordance with the principles laid down in Article 1 of, in conjunction with recital 7 in the preamble to, the contested directive and Articles 2 EC and 3(1)(c) and (g) EC. That aspect cannot therefore be categorised as being contrary to the principle of legal certainty without calling into question the very economic bases of the allowance trading scheme as set out in the contested directive in a manner consistent with the rules of the EC Treaty. 204 Accordingly, the lack of a specific rule in the contested directive establishing a cap or control mechanism for allowance prices cannot be categorised as constituting a manifest and grave disregard for the limits of the discretion of the Community legislature. 205 Consequently, this plea must be rejected as unfounded. 206 It follows from all of the foregoing that the applicant has failed to demonstrate that, in adopting the contested directive, the Community legislature acted unlawfully or committed a sufficiently serious breach of a rule of law designed to confer rights on the applicant. Consequently, the application for damages must be rejected without there being any need to rule on the other conditions giving rise to non‑contractual liability on the part of the Community or on the plea of inadmissibility raised by the Council in relation to certain annexes to the reply. Costs 207 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs in accordance with the forms of order sought by the Parliament and the Council. 208 Under the first subparagraph of Article 87(4) of the Rules of Procedure, institutions which have intervened in the proceedings are to bear their own costs. Consequently, the Commission, which has intervened in support of the Parliament and Council, must bear its own costs. On those grounds, THE GENERAL COURT (Third Chamber) hereby: 1. Dismisses the action; 2. Orders Arcelor SA to bear its own costs and those incurred by the European Parliament and the Council of the European Union; 3. Orders the European Commission to bear its own costs. Azizi Cremona Frimodt Nielsen Delivered in open court in Luxembourg on 2 March 2010. [Signatures] Table of contents Legal context I – Rules of the EC Treaty II – The contested directive Facts and procedure Law I – Admissibility of the application for annulment A – Arguments of the parties 1. Arguments of the Parliament, the Council and the Commission 2. Arguments of the applicant B – Findings of the Court II – Admissibility of the application for damages A – Arguments of the parties B – Findings of the Court III – The soundness of the application for damages A – The requirements governing the non‑contractual liability of the Community B – The existence of a sufficiently serious breach of the right to property, of the freedom to pursue an economic activity and of the principle of proportionality 1. Arguments of the parties 2. Findings of the Court C – The existence of a sufficiently serious breach of the principle of equal treatment 1. Arguments of the parties 2. Findings of the Court D – The existence of a sufficiently serious breach of the freedom of establishment 1. Arguments of the parties 2. Findings of the Court E – The existence of a sufficiently serious infringement of the principle of legal certainty 1. Arguments of the parties 2. Findings of the Court Costs * Language of the case: English.