61959C0014
OPINION OF MR ADVOCATE GENERAL LAGRANGE (
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)
Mr President,
Members of the Court,
In this case you have to contend for the first time with Annex I to the Treaty which relates to the definition of the expressions ‘coal’ and ‘steel’. It is a real problem of delimitation which is submitted to you, the legal and economic aspects of which are to a great extent permeated if not dominated by highly technical considerations.
The ‘Société des Fonderies de Pont-à-Mousson’ operates four foundries of which only the one at Pont-a-Mousson, which morever is the largest, uses the process known as ‘pre-melt’, which enables it, owing to the proximity of the iron mines of the Lorraine ore field, to pour the molten pig iron produced in its blast furnaces at once into castings instead of using the customary process of remelting solid pig iron and scrap in cupola furnaces. Is the scrap used concurrently with the iron ore for the production of this molten pig iron, the addition of which is necessary to reduce the phosphorus content of the burden, subject to the equalization charge on Community undertakings consuming scrap levied to finance the operation of the system of equalization of scrap imported from third countries, introduced by the High Authority? This is the subject-matter of the action.
From 1 April 1954, the date when Decision No 22/54, which introduced the first compulsory system for the equalization of scrap, entered into force, to 1 December 1956 the company regularly paid its equalization contributions, just as it had always paid the general levy under Article 50. But on 19 April 1957 the company notified the High Authority that in its view it was not liable to pay the equalization levy on scrap used for the production of molten pig iron which is transformed directly into piping and pig iron castings in the Pont-à-Mousson works. In its letter of 24 January 1959 the High Authority refused to accept this point of view. It is this refusal, treated as a decision of the High Authority, which the company has challenged before the Court by an application for annulment under Article 33.
The first question, which the High Authority merely brings to the Court's attention without actually raising the objection of inadmissibility, is whether the letter of 24 January 1959 is a decision within the meaning of Article 14 of the Treaty, against which proceedings may be instituted under Article 33.
If reference is made to the case-law of the Court and in particular to the judgment in Case 32/58, ‘Société Nouvelle des Usines de Pontlieue-Aciéries du Temple’, of 17 July 1959, there appears to be no doubt that the answer to this question is in the affirmative. That case-law in fact makes it clear that for the purpose of applying the decisions establishing the scheme for the equalization of imported scrap undertakings are free to apply at any time to the High Authority (and even direct to the relevant departments in Brussels) to obtain the settlement of a problem regarding their liability to pay such equalization or the amount thereof without waiting for the final enforceable order for the recovery of that amount pursuant to Article 92. That is what happened in this case. I now come to my examination of the two submissions raised. The first is that the molten pig iron used by the Pont-à-Mousson works is not a product falling within Annex I and the second, put forward in the alternative, is that, even if it is considered to be a product covered by Annex I, it would in any event be discriminatory and consequently illegal to render scrap used in the production of that molten pig iron subject to contributions in respect of equalization.
I
According to Decision No 2/57, adopted pursuant to Article 53 of the Treaty, ‘the undertakings referred to in Article 80 of the Treaty, which are consumers of scrap’ (Article 2 of the decision) are bound to pay equalization contributions. Under Article 80 ‘For the purposes of this Treaty, “undertaking” means any undertaking engaged in production in the coal or the steel industry within the territories…’. Article 81 provides that ‘The expressions “coal” and “steel” are defined in Annex I to this Treaty’. Finally, paragraph (1) of Annex I reads as follows: ‘The expressions “coal” and “steel” cover the products listed below’. That list is in two parts entitled ‘FUELS’ and ‘IRON AND STEEL’; under the second we find, under the heading ‘Pig iron and ferro-alloys’, the following product, ‘Foundry and other pig iron’. This action is concerned solely with the question whether molten pig iron produced by the applicant in its blast furnaces is or is not to be classified under the heading, the only one listed in Annex I which can apply. We must bear in mind (and the parties are agreed on this point) that a negative answer would mean that the company would not only be exempt from the equalization levy imposed under Article 50 and, generally, from all obligations and rights arising under the Treaty, since in effect it would not in that case be an ‘under-taking’ under Article 80.
The very exhaustive written procedure in this case, the extremely good and clear oral argumentation which the Court most certainly remembers and the interesting and amply commentated visit to the factory prior to the hearing make it unnecessary for me to recapitulate in detail, point by point, the respective arguments submitted by the parties. I would only endeavour to summarize them and select the main points.
In the applicant's view, molten pig iron cast directly into moulds cannot be regarded as ‘Foundry and other pig iron’. Why? Mainly because it is not a ‘product’. The only products manufactured by Pont-à-Mousson are piping and, on a much smaller scale, castings, that is to say finished products which are specifically excluded from the Treaty by Note 5 to Annex I. What the applicant calls ‘the foundry industry’ is outside the Treaty; it is not part of the iron and steel industry. The only reason why Annex I included ‘Foundry and other pig iron’ in its nomenclature is because that product is the vital raw material for the manufacture of steel. It is true that it is also used as a raw material in the foundry industry, but in these circumstances it can be brought within the scope of that provision only as a primary material, ‘stable product’ or ‘marketable product’, and not as being in a ‘transitional state which does not even complete a basic production cycle’, to repeat various expressions taken from the oral submissions. And the applicant goes on to stress the qualitative and quantitative differences, as well as the differences relating to the cycle and the size of the casting operations, between the production of standard pig iron cast in blocks and lumps, which in the solid state becomes a marketable product, and the molten pig iron at Pont-à-Mousson which is produced and differentiated solely to meet the requirements of the finished product, which are moreover continually changing in accordance with the customers' specifications.
The whole of the applicant's argument is an endeavour to support this principal line of reasoning. In the first place, the English expression ‘pig iron’, which is used in the OEEC nomenclature upon which Annex I is based, and which has been translated into French as ‘fonte brute’, is said to refer solely to pig iron cast in blocks and lumps.
Secondly, the applicant compares the heading of Annex I relating to pig iron and those relating to steel and asks why the OEEC expression ‘acier brut’ (‘crude steel’) has not been used by analogy with ‘fonte brute’ (‘pig iron’) and why, on the other hand, it was believed to be necessary to mention ‘Liquid steel cast or not cast into ingots’ and to stipulate in Note 3 the fate of the ‘… production of liquid steel for castings’, with which ‘The High Authority shall concern itself… only where this is to be regarded as an activity of the steel industry proper’.
According to the applicant there is only one explanation: liquid steel for castings is not ‘crude steel’; if nothing had been said it would have fallen outside the Treaty and it was because of the intention to include such steel if it was produced in an integrated undertaking that it was necessary to abandon the terminology of the OEEC nomenclature and make it clear in this special case that it was to be treated like all other crude steel produced in the undertaking and intended for the production of semi-finished and finished steel products listed in the nomenclature. This is an exception which is explained by the fact that usually in an integrated steel works only a negligible proportion of steel production goes to the foundry; the second paragraph of Note 3, which reads: ‘Any other production of liquid steel for castings, such as that at small and medium-sized independent foundries, shall be subject to statistical coverage only’, affords further confirmation of this exception. This is the general rule applicable to liquid steel for castings, which is normally outside the Treaty as it is not ‘crude steel’.
Finally, an argument is based on a passage in Annex II relating to scrap which reads ‘Article 59 [allocation in the event of shortages] shall not apply to: cast iron scrap usable only in foundries outside the jurisdiction of the Community’. According to the applicant this provision confirms that foundries are outside the Community. A distinction between foundries engaged in premelt and melt is no more an issue here than it is anywhere else. A foundry does not become part of the iron and steel industry because it produces its own requirements of pig iron itself.
The Court will remember the High Authority's reply to this reasoning.
In its view ‘fonte brute’ (‘pig iron’) is in no way synonymous with ‘fonte solide’ (‘solid pig iron’); pig iron is that which is produced in blast furnaces, whatever its ultimate destination. This kind of production belongs quintessentially to the iron and steel industry and not to that of foundries and this state of affairs cannot be altered by the fact that in the Pont-à-Mousson works molten pig iron from the blast furnaces is used immediately for the manufacture of the finished product, which does not itself come under the Treaty. Furthermore, the necessary differentiations for manufacturing finished products are carried out mainly in the mixers into which are put the measured amounts of ordinary and synthetic pig iron produced in the converters, much more often than in the blast furnaces: in the blast furnace the measured amounts used to obtain the qualities best suited to the desired result are scarcely more differentiated than in normal blast furnaces. Moreover, the performance of the Pont-à-Mousson blast furnaces is comparable to that of a number of blast furnaces producing steel; they are not ‘small’ blast furnaces. Secondly, the High Authority calls attention to the fact that the aim of Annex I is not to delimit the frontier between what is and what is not part of the ‘iron and steel industry’ but to determine more or less empirically the list of products covered by the Treaty. For various reasons it has often been considered appropriate to remove from the jurisdiction of the Treaty certain products which are nevertheless iron and steel products. This is the explanation for Note 3: the production of liquid steel for castings is unquestionably an operation of the iron and steel industry, but, for reasons of expediency, it was decided that it should be made subject only to statistical coverage when it does not originate in an integrated factory. Such a decision could always be modified in accordance with the procedure prescribed in the second paragraph of Article 81, which enables the High Authority to make additions to the list in Annex I upon a unanimous act of the Council. In short, it has therefore been necessary to define the OEEC nomenclature by means of various distinctions, so far as steel is concerned, for the purpose of restricting and not of extending the list of crude steel products. This does not apply to pig iron.
As far as the terminology is concerned, the High Authority refers to various documents which show that the term ‘pig iron’ means pig iron as the High Authority understands it, that is to say, the raw material whether in a solid or liquid state: ‘brut’ means ‘unworked’ and this is why foundries engaged in melt, which are moreover traditionally regarded as not forming part of the iron and steel industry, are quite naturally excluded without the need for any statement to that effect.
The High Authority answers the argument based on Annex II as follows: that provision mentions ‘cast iron scrap usable only in foundries outside the jurisdiction of the Community’. This implies that there are foundries which are not within the jurisdiction of the Community, but it certainly does not mean that all pig iron foundries are outside it: in fact that provision refers only to the traditional type of foundry engaged in melt which is the only type capable, from the practical and commercial — if not the technical — point of view, of charging cast iron scrap.
What is one to think of this dispute?
There is first of all one point which seems to be fairly clear: as far as the terminology is concerned the High Authority is right. Unquestionably, within the meaning of Annex I ‘fonte brute’ (‘pig iron’) does not mean ‘pig iron in the solid state’ as opposed to pig iron in the liquid state. The word ‘brut’ is in this context the opposite of ‘worked’ or ‘transformed’.
What in fact was the issue? As the ‘Rapport de la delegation français sur le Traité’ (Report of the French Delegation on the Treaty) stresses (p. 77) the main object of Annex I was, by drawing up a list of products covered by the Treaty, to determine at what stage in the working of products the list of steel products included in the common market was to stop. That is why the thread running through Annex I is the distinction between crude products, semi-finished products, finished products and even so-called ‘end’ products. This is seen clearly in reference No 4300, where liquid steel cast or not cast into ingots is, as the heading shows, clearly regarded as a ‘crude product’. In this connexion it is to be noted that the High Authority's interpretation of Note 3 appears to me to be correct: production of liquid steel is the production of crude steel, even if it is intended for castings, and Note 3 is designed to restrict and not to enlarge the Community's jurisdiction in this particular field. The wording of Note 3 is to be explained as follows: liquid steel for castings is ‘crude steel’ or, if preferred, a ‘crude steel product’, and as such, if nothing more was said, would be caught by the Treaty; but for reasons of expediency it is considered that it has to be excluded, at least until further notice, but the intention is to exclude it except in one special case, namely where its production ‘is to be regarded as an activity of the steel industry proper’, which, evidently, in spite of the explanation contained in the following paragraph, is not completely clear. It is therefore this exception to an exception which explains the kind of wording used, although it cannot be said to be a model of its type. Moreover, the difference between the expressions used in Note 3 and in the other Notes 1, 2, 4 and 5 must be borne in mind: whereas the latter use the words ‘Not including’ certain products, Note 3 merely provides that: ‘The High Authority shall concern itself… only …’ in certain cases, the production not included being subject none the less to statistical coverage. This provides further confirmation of the fact that in the minds — however confused they were in certain respects — of the authors of the Annex one point is clear, namely that liquid steel cast into ingots is ‘crude steel’ that is to say one of the ‘crude products’ falling within the Treaty save as otherwise provided.
In the final analysis, there is no justification for drawing a distinction between pig iron and molten pig iron: pig iron is iron which has not been worked, that is to say is in the state of a ‘crude product’. However, it is clearly also necessary that molten pig iron should be or be capable of being a ‘product’. But in this connexion the Court is aware that this is so, since present-day techniques permit, in certain conditions, the carriage and delivery of pig iron in the molten state. Those of you who were Members of the Court of Justice of the ECSC will recall that this fact was brought to our notice during the hearing of the ‘Chasse’ case. That is the reason why it has been considered necessary to amend the customs nomenclature, since some pig irons can now reach the frontier in the molten state.
But this is no answer to the question which you have to determine, because it is still necessary to ascertain — and this in my view is the crux of this action — whether, having regard to the particular conditions in which the Pont-à-Mousson works operate, the molten pig iron from its blast furnaces and its converters may be treated as a ‘product’ within the meaning of Annex I or whether on the contrary at that moment it is merely in ‘a transitional state which does not even complete a basic production cycle’ to use the felicitous expression of Mr Bâtonnier Allehaut, to which I have already drawn attention.
In order to come to a decisoin it is first of all necessary to endeavour to grasp fully what was in the minds of the authors of the Treaty when they decided to fix the boundaries of the partial integration that they were bringing about. The underlying concept appears to be contained in Article 80 of the Treaty: ‘For the purposes of this Treaty, “undertaking” means any undertaking engaged in production in the coal or the steel industry’, which is defined elsewhere. ‘Engaged in production’ is an industrial and economic but not a commercial concept. There is no attempt to include, as there is for example in the case of turnover tax, the sale of the products, whether they have been processed or not, but only their production, that is to say everything comprised in the whole processing cycle of the most highly-worked product from the extraction of the raw material to the finishing stage at which it is considered that the line must be drawn. In considering such a concept, which in the field of taxation would bear a greater similarity to a system of value added tax, it is clear that only a limited importance must be attached to the commercial cycle which follows this process, and in particular to the phenomenon of integration. Whether or not each transformation stage culminates in a sale or whether, on the contrary (and we know that this happens), the same undertaking takes upon itself to carry out the whole process from, for example, the extraction of the iron ore and coal to the manufacture of rails and wire rods, all stages in the production process are covered by the Treaty, whether the matter in question is the levy under Article 50 or the exercise by the High Authority of any of its powers. Each product is of course only covered once and if, for example, in the case of the levy, the High Authority makes its assessment having regard to the value of the tonnage produced, precautions are taken to tax only the value ‘added’, but to tax it in every case: this, as the Court knows, is the system adopted in the case of decisions taken for the implementation of Article 50. There can be no doubt that, on the pretext of integration and whatever its merits may be (which, moreover, are not generally disputed, at least from the technical point of view), a part of the production cycle corresponding to a certain ‘value added’ falls outside the Treaty. And that remains true even in the case where the transition from one stage of production to another coincides, if I may so express it, with the ‘departure’ of the product from the field of application of the Treaty, in other words, where integration as it were ‘stands astride’ both those fields which are covered by the Treaty and those which are not: proximity to the frontier cannot be a reason for exemption, otherwise the field of application of the Treaty would be arbitrarily constricted. Is such a situation likely to bring about prohibited distortions or discrimination? I will consider this question presently in connexion with the second submission; there is however no doubt that it cannot enable that part of the integrated undertaking's production which by its very nature falls within the Treaty to be taken out of it.
In a case as that of Pont-à-Mousson there is no need for the product to be a ‘marketable product’ which has been fully prepared for sale and which the company should be deemed to sell to itself. It is sufficient (but also necessary) that it should be a ‘product’ which, owing to its physical and chemical qualities, the process by which it was manufactured and also its purpose, comes under one of the headings of Annex I.
This appears to be the case in these proceedings.
Disregarding cupola furnaces, which only play an auxiliary role and whose operations are not at issue, the raw material used at the Pont-à-Mousson works is pig iron produced in the blast furnaces. If I correctly understood the explanations which were given when the Court visited the works, two of the four blast furnaces now in service produce Cleveland pig iron for casting which is trans-ported direct to the mixers. Two others are used for the production of semi-phosphoric pig iron; the pig iron is first of all sent to the converters where, as a result of oxidization which converts it into steel, followed by recarbonization, it becomes ‘pig iron with a high degree of purity and little phosphorus, called synthetic haematite pig iron’ (p. 2 of the printed document handed to us at the factory). It reaches the mixers in this condition to be mixed with Cleveland pig iron; it is this mixture which is sent to the centrifugal machines which the layman finds so impressive, where the Court saw for itself the pig iron turned into piping. The mixture consists of 55 % Cleveland pig iron and 45 % semi-phosphoric pig iron for casting.
Thus there is a clear distinction between: (1) Foundry pig iron produced by blast furnaces and in part by converters; (2) The mixing operations which precede centrifugation. There appears to be no doubt that the main feature of the novel manufacturing process used at Pont-à-Mousson lies in the second of these operations, that is to say the deliberate use of synthetic pig iron which ‘in the first place permits the composition of the molten foundry pig iron from the blast furnaces to be under constant control’ and ‘also permits the phosphoric content of this molten pig iron to be reduced’ (cf. the beforementioned document). I am not of course discussing the centrifugation which is the actual foundry operation. It is the admixture of the synthetic pig iron which permits the phosphorus content to be reduced in such a way that, if it is then mixed with Cleveland pig iron in the proper proportions, the correct measured amounts for the specific qualities required by various finished products can at all times be obtained: this is the starting point of the operations of the foundry industry, which fall outside the Treaty. However, pig iron from the blast furnaces and converters, which is the raw material of that industry, is unquestionably foundry pig iron.
Moreover, it is only necessary to look at any price-list in order to verify this. Let us, for example, refer to item No 40 of the ‘Usine Nouvelle’ of 1 October 1959. We find there, on page 83, in the section devoted to the prices of iron and steel products, under the heading ‘pig iron’: Cleveland pig iron for casting (phosphorus content 1 to 1-4) and semi-phosphoric pig iron for casting (phosphorus content 0.7 to 1). Then comes pig iron for refining, that is to say pig iron for the manufacture of steel, and finally haematite pig iron (phosphorus content equal to or less than 0.12), which also includes pig iron for casting and refining. Incidentally, it is apparant from this price-list that the distinction between ‘pig iron for the manufacture of steel’ and ‘foundry pig iron’, that is between pig iron for refining and pig iron for casting, is not arbitrary and is in accordance with the facts, which proves that the authors of Annex I went well beyond the chemical concept of steel and broadly took into consideration, and it must be added in a fairly empirical way, the concept of the metallurgical industry, that is to say the iron industry.
As the High Authority has correctly pointed out, the production of pig iron is itself no doubt affected to a certain extent by the specification of the products which are to be manufactured, that is to say that the charge in the blast furnace can be proportioned to meet that specification; however, this is a normal occurrence; if an industrialist prefers to manufacture a specific basic material which he needs himself rather than buy it outside the factory he obviously avails himself of the opportunity of giving this material properties corresponding exactly to his production requirements. As we have seen in this case the differentiations necessitated by the specification of the products to be manufactured arise for the most part at a later stage. The reduction of the phosphorus content already effected in the blast furnace by the use of scrap is a perfectly normal process which certainly does result in the iron thereby produced ceasing to be classified as pig iron: moreover, we know that through the admixture of synthetic pig iron the company has succeeded, in order to save scrap, in reducing to a great extent the specific input reference of that material in the blast furnace.
Therefore it appears to me to be quite clear that the pig iron which leaves the blast furnaces and converters at Pont-à-Mousson consists in part of Cleveland pig iron for casting and in part of semi-phosphoric pig iron for casting. These two kinds of pig iron must unquestionably be classified under the heading ‘Foundry and other pig iron’ in Annex I, even if, as in this case, the second, because of its degree of purity, acquires the character of ‘haematite pig iron for casting’, and the production cycle permits a sufficiently clear distinction to be drawn between them for it to be unavoidable to acknowledge that Pont-à-Mousson' is engaged in production in this field. It is therefore undoubtedly an undertaking within the meaning of Article 80.
II
My observations on the second submission will be much shorter.
Even if, so the argument runs, the applicant company can be regarded in law as an undertaking falling within the scope of the Treaty in so far as it produces molten pig iron, it could not in any event be liable to pay equalization contributions. When the High Authority subjected it to payment of those contributions it was in fact guilty of discrimination and imposed a special charge upon it compared with undertakings competing directly with it.
A preliminary observation has to be made. It is quite clear — and this moreover has not been challenged — that once it is accepted that Pont-à-Mousson is an undertaking within the meaning of Article 80, to render it subject to the system of equalization is in strict compliance with the basic decisions adopted pursuant to Article 53, and in particular with Decision No 2/57, which, as the Court knows, applies to all undertakings consuming bought scrap, except as provided in Article 10 which exempts inter alia, integrated steel foundries.
Consequently, it is in fact the very legality of the basic decisions which is at issue. But the applicant has at no time pleaded such illegality. It is indeed true that the Court of Justice of the ECSC in its judgments in the ‘Chasse’ and ‘Meroni’ cases acknowledged that undertakings are entitled to raise the plea of illegality with specific respect to decisions introducing the equalization scheme for scrap, but in those cases illegality had been expressly pleaded. Can it be assumed that it has been pleaded by implication by way of submissions based directly on an infringement of the Treaty advanced in support of an application brought solely against decisions implementing the basic decisions? This assumption may be questioned, especially as any finding of illegality with regard to decisions which, as in this case, can be adopted only with the unanimous endorsement of the Council, is a very serious matter: there is a danger that in many cases the need — moral if not legal — to adopt a new decision which complies with the judgment of the Court and obtains the required unanimity would encounter serious difficulties.
However, in this case the illegality alleged by implication would be negative in character: it would lie in the fact that the basic decisions did not exempt foundries such as Pont-à-Mousson which engage in pre-melt. This is precisely what the applicant, which did not have to plead — and could not plead — that a specific provision of the decision had been infringed, asserts. In these circumstances the objection in the present case can in my opinion be overruled. In substance, discrimination relating to conditions of competition is pleaded from three points of view.
First of all, there is the competition between foundries engaged in pre-melt and integrated steel foundries, which were exempted by Decision No 2/57.
On this point the High Authority affirms that pig iron foundries and steel foundries, which do not manufacture the same products, are not in fact in competition: in short, there is no competition between pig iron ‘pipes’ and steel ‘tubes’. In any event, the applicant does not stress this point. In fact the exemption of steel foundries was mentioned principally in order to show that, due to that exemption, integrated pig iron foundries were alone in being subject to equalization, since steel foundries were not liable, some by virtue of Note 3 to Annex I, others under Article 10 of Decision No 2/57, which is a special exemption clause. However, that is an argument which has no legal significance for, on the one hand, an exemption provided for in one case is not in itself a ground for creating entitlement to exemption in another case, and, on the other hand, the applicant does not dispute the legality of the exemption which has in fact been granted. We find in this case a situation somewhat similar to that with which the Court has been confronted in cases dealing with own arisings.
Second adverse effect on competition: the competition between Pont-à-Mousson and foundries engaged in melt.
On this point the explanations provided in the written procedure and during the hearing were exhaustive and I do not think it necessary to go into them in detail. Foundries engaged in melt do not have to pay the equalization levy on the scrap which they consume and at the same time they benefit from the rather lower prices for domestic scrap brought about by the operation of the scheme. This is clearly an advantage, but it is due to the fact that these foundries are outside the Treaty, which is one of the effects of partial integration. On the other hand, the equalization levy has been paid on the scrap content of the new pig iron which they buy. It is true that there is argument as to the proportion of this new pig iron used, which no doubt varies. As far as cast-iron scrap is concerned the equalization levy has not been paid on it, for the simple reason that it is not covered by equalization scheme; but whether it is for this or for any other reason the fact is that it is very expensive: this point is not in dispute. Finally, there is argument concerning the case of foundries engaged in melt, which are said to consume steel scrap either largely or even exclusively. There are such foundries but according to the High Authority products manufactured in this way are of poor quality.
This whole discussion shows that it is impossible to find exact and generally accepted comparisons and, in the final analysis, there is no reason to believe that there exists a special charge, borne by foundries engaged in pre-melt, which adversely affects competition between those foundries and foundries engaged in melt, and which arises solely out of the equalization levy.
The same applies (in the case of the third category of competing undertakings) to the competing manufacture of goods of asbestos cement, concrete and plastic, which are outside the Treaty. Here there is without any question real competition, especially in the piping sector of the market, but it is competition between different industries, between the iron industry and the cement or plastic materials industries, which obviously are unaffected by problems connected with scrap. On the other hand, the aim of the equalization of scrap — and no one disputes that it achieved this result — was to reduce the price of scrap below what it would have been were it not for the introduction of the scheme. The High Authority asserts that in spite of having to pay the contribution, Pont-à-Mousson in fact profited from the system. The applicant points out that the burden of equalization weighs more heavily upon it than upon steel producers because it does not have any own arisings. ‘Chasse’ had previously put forward a similar argument in connexion with its haematite pig iron, which the Court did not uphold. In any event, it would be necessary to prove not only that the equalization charge has turned out to be higher in the case of foundries engaged in pre-melt than the advantage which the latter have derived from the resultant comparative lowering of prices, but also that this net charge has placed those foundries in such a situation that the normal conditions of competition have thereby been appreciably and arbitrarily distorted. This has not been proved at all.
Furthermore, it must be noted that such a solution would be based only on the principles of natural justice and not on a failure to comply with a given provision of the Treaty. Article 67 refers only to action by a Member State not to action by the High Authority. The High Authority is wrong to rely on Article 3(g); that provision in fact prohibits the arbitrary protection by the Community of the industries which are subject to its jurisdiction. In this case the applicant certainly does not ask to be protected against competing industries not covered by the Treaty; it only complains that the High Authority discriminated against it or imposed upon it to its detriment a special charge which is said to place it in an unfavourable competitive position in relation to the industries in question.
In this connexion it appears that the only legal basis which can be found is Article 3, which provides that the institutions of the Community shall act only in the ‘common interest’. The Court considered the arguments concerning this issue in its judgment in Case 15/57, Compagnie des Hants Fourneaux de Chasse v High Authority of the Coal and Steel Community (Rec. Vol. IV, 1958, p. 189). In short, what is in issue is the general principle that a public authority must not act arbitrarily. But it cannot reasonably be maintained that the High Authority has acted arbitrarily by bringing foundries which engage in pre-melt within the scope of the equalization scheme or, more precisely, by forbearing to exempt from the general scheme for the equalization of scrap an activity which, if the first submission is not accepted, is undoubtedly a production activity under the Treaty. The Court has frequently had occasion to rule that the equalization scheme is based primarily on the solidarity of all consumers of scrap, which implies that its general application must be as comprehensive as possible. There seems to me to be no ground justifying the existence of a legal obligation on the part of the High Authority to grant an exception in this case which the Court has to adjudicate, however special the facts may be in certain respects.
It is my opinion:
That the application should be dismissed and that the costs should be borne by the ‘Société des Fonderies de Pont-à-Mousson’.
(
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