61958CJ0042_EN
Parties
Subject of the case
Grounds
Decision on costs
Endorsements
Operative part
Parties
IN CASE 42/58
SOCIETE DES ACIERS FINS DE L'EST ( SAFE ), LIMITED COMPANY WHOSE REGISTERED OFFICE IS IN PARIS, REPRESENTED BY ITS MANAGING DIRECTOR EUGENE DE SEZE, ASSISTED BY P . O . LAPIE AND JEAN DE RICHEMONT, BOTH ADVOCATES AT THE COUR D'APPEL, PARIS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF GEORGES MARGUE, 6 RUE ALPHONSE-MUNCHEN, APPLICANT,
V
HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, REPRESENTED BY ITS LEGAL ADVISER, FRANS VAN HOUTEN, ACTING AS AGENT, ASSISTED BY JEAN COUTARD, ADVOCATE OF THE CONSEIL D'ETAT, PARIS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT ITS OFFICES, 2 PLACE DE METZ, DEFENDANT,
Subject of the case
APPLICATION FOR ANNULMENT AND AN ACTION FOR FAILURE TO ACT AND OBJECTIONS OF ILLEGALITY IN RESPECT OF THE LETTER FROM THE MARKET DIVISION OF THE HIGH AUTHORITY OF 31 JULY 1958, NOTIFIED TO THE APPLICANT, AGAINST THE IMPLIED DECISION OF REFUSAL ALLEGEDLY RESULTING FROM THE ABSENCE OF A REPLY FROM THE ADMINISTRATION TO A REQUEST FOR EXEMPTION SUBMITTED BY THE APPLICANT, AND AGAINST THE LETTERS OF THE HIGH AUTHORITY OF 18 DECEMBER 1957 AND 17 APRIL 1958 ( JO OF 1.2.1958, P . 45 ET SEQ ., AND OF 13.5.1958, P . 30 ET SEQ .),
Grounds
P . 190
ADMISSIBILITY
1 . WAS THE APPLICATION AGAINST THE LETTER FROM THE MARKET DIVISION OF THE HIGH AUTHORITY OF 31 JULY 1958 LODGED WITHIN THE PRESCRIBED PERIOD?
IT IS ONLY " IN SO FAR AS NECESSARY " THAT THE APPLICANT CONTESTS THAT LETTER, WHICH IT DESCRIBES AS A " DECISION TO POSTPONE TAKING A DECISION ".
IF THE LETTER OF 31 JULY 1958 CONSTITUTES A DECISION, THAT FACT MUST AFFECT THE DECISION OF THE COURT ON THE ACTION FOR FAILURE TO ACT BECAUSE THE APPLICANT COULD NOT THEN SUBSTANTIATE THE ARGUMENT THAT THE DEFENDANT DID NOT ADOPT ANY DECISION WITHIN THE PERIOD OF TWO MONTHS SUBSEQUENT TO THE APPLICANT'S LETTER OF 23 JULY 1958 . THEREFORE THE ADMISSIBILITY OF THIS APPLICATION SHOULD BE EXAMINED .
THE DEFENDANT RAISES THE SUBMISSION OF INADMISSIBILITY ON THE GROUND THAT THE APPLICATION AGAINST THE LETTER OF 31 JULY 1958 WAS NOT LODGED WITHIN THE PRESCRIBED PERIOD . THE REGISTERED OFFICE OF THE APPLICANT IS IN PARIS, THAT IS, IN METROPOLITAN FRANCE . THEREFORE, UNDER THE THIRD PARAGRAPH OF ARTICLE 33 OF THE ECSC TREATY AND ARTICLE 85 ( 1 ) AND ( 2 ) OF THE RULES OF PROCEDURE OF THE COURT OF JUSTICE OF THE ECSC, THE PERIOD WITHIN WHICH THE APPLICANT HAD TO CONTEST THE SAID LETTER EXPIRED ONE MONTH AND THREE DAYS FROM THE DAY FOLLOWING NOTIFICATION THEREOF .
THE APPLICATION WAS LODGED AT THE COURT REGISTRY ON 20 OCTOBER 1958 . ACCORDINGLY, IT WAS ONLY MADE WITHIN THE PRESCRIBED PERIOD IF THE LETTER OF 31 JULY 1958 ONLY REACHED THE APPLICANT ON 17 SEPTEMBER 1958 AT THE EARLIEST .
THE APPLICANT, UPON BEING ASKED QUESTIONS ABOUT THIS BY THE COURT, DID NOT SUPPLY ANY EXPLANATION . HOWEVER, THE DEFENDANT FORMALLY DECLARED THAT THE SAID LETTER WAS ENTERED IN ITS REGISTER OF OUTGOING MAIL UNDER THE DATE OF 1 AUGUST 1958 . THAT STATEMENT HAS NOT BEEN CONTESTED BY THE APPLICANT . NEVERTHELESS, IT HAS NOT BEEN POSSIBLE TO ESTABLISH THE PRECISE DATE ON WHICH THE SAID LETTER REACHED THE APPLICANT .
HOWEVER, IT WOULD SEEM UNREASONABLE TO SUPPOSE THAT A LETTER SENT FROM LUXEMBOURG ON 1 AUGUST 1958 AND WHICH THE APPLICANT ADMITS HAVING RECEIVED DID NOT REACH BOULOGNE-BILLANCOURT TO WHICH IT WAS ADDRESSED, BEFORE 17 SEPTEMBER 1958 . ACCORDINGLY, IT IS ESTABLISHED THAT THE APPLICATION AGAINST THE LETTER OF 31 JULY 1958 WAS NOT LODGED WITHIN THE PRESCRIBED PERIOD .
THEREFORE, THIS APPLICATION IS INADMISSIBLE .
2 . IS THE ACTION FOR FAILURE TO ACT ADMISSIBLE?
P . 191
THE DEFENDANT DOES NOT RAISE ANY OBJECTIONS AS TO THE ADMISSIBILITY OF THE ACTION FOR FAILURE TO ACT, IN THAT IT ADMITS THAT NO DECISION WAS ADOPTED WITHIN THE PERIOD OF TWO MONTHS LAID DOWN IN THE FIRST PARAGRAPH OF ARTICLE 35 OF THE ECSC TREATY . THAT QUESTION HOWEVER, MUST BE EXAMINED BY THE COURT OF ITS OWN MOTION .
THE ONLY ANSWER TO THE APPLICANT'S LETTER OF 23 JULY 1958 WHEREBY IT LODGED A REQUEST FOR EXEMPTION WITH THE HIGH AUTHORITY WAS A LETTER FROM THE DIRECTOR OF THE MARKET DIVISION OF THE HIGH AUTHORITY DATED 31 JULY 1958 STATING THAT THE QUESTION WAS " UNDER STUDY ". THAT LETTER DOES NOT CONSTITUTE A DECISION WITHIN THE MEANING OF THE TREATY .
THERE WAS, THEREFORE, AN IMPLIED DECISION OF REFUSAL AS MEANT BY THE AFORESAID ARTICLE 35 . THE ACTION BROUGHT AGAINST THAT DECISION WAS CLEARLY WITHIN THE PRESCRIBED PERIOD .
THE ACTION FOR FAILURE TO ACT IS THEREFORE ADMISSIBLE .
SUBSTANCE
1 . CAN THE APPLICANT RAISE AN OBJECTION OF ILLEGALITY AGAINST THE LETTERS OF THE HIGH AUTHORITY OF 18 DECEMBER 1957 AND 17 APRIL 1958?
ACCORDING TO THE ESTABLISHED CASE-LAW OF THE COURT, AN UNDERTAKING WHICH CONTESTS AN INDIVIDUAL DECISION IS ENTITLED TO RAISE THE OBJECTION OF ILLEGALITY AGAINST THE GENERAL DECISIONS ON WHICH THEY ARE BASED . THE PARTIES ARE IN AGREEMENT ABOUT THE FACT THAT THE IMPLIED DECISION OF REFUSAL RESULTING FROM THE ABSENCE OF A REPLY FOR MORE THAN TWO MONTHS FROM THE HIGH AUTHORITY TO THE LETTER FROM THE APPLICANT OF 23 JULY 1958 IS BASED ON THE PRINCIPLES SET OUT IN THE ABOVEMENTIONED LETTERS OF THE HIGH AUTHORITY; AND SUCH INDEED IS MANIFESTLY THE CASE . THE QUESTION THEREFORE ARISES WHETHER THOSE LETTERS CONTITUTE DECISIONS .
( A ) DOES THE LETTER OF 18 DECEMBER 1957 CONSTITUTE A DECISION?
THE LETTER FROM THE HIGH AUTHORITY DATED 18 DECEMBER 1957 STATES A GENERAL PRINCIPLE IN THAT IT REFERS TO THE DEFINITION OF THE CONCEPT OF " OWN RESOURCES " REGARDING FERROUS SCRAP .
THAT LETTER WAS PUBLISHED IN THE JOURNAL OFFICIEL OF 1 FEBRUARY 1958 AND THUS BROUGHT TO THE NOTICE OF ALL THE UNDERTAKINGS OF THE COMMUNITY .
IT WAS DESCRIBED AS A " DECISION " BY THE MARKET DIVISION, IN A LETTER OF 19 FEBRUARY 1958, IN ANSWER TO A FORMAL QUESTION MADE BY THE DEUTSCHE SCHROTTVERBRAUCHERGEMEINSCHAFT TO THE HIGH AUTHORITY ON 6 FEBRUARY 1958 .
P . 192
NEVERTHELESS, CONTRARY TO THE APPLICANT'S ARGUMENTS, THE SAID LETTER OF 18 DECEMBER 1957 CANNOT LEGALLY BE CONSIDERED AS A DECISION WITHIN THE MEANING OF THE TREATY .
ADMITTEDLY, THE LETTER OF 18 DECEMBER 1957 WAS IN ANSWER TO A REQUEST FROM THE OCCF, WHOSE MEMBERS HAD FAILED TO AGREE ON THE MEANING OF THE WORDS " OWN RESOURCES ", AND WHICH HAD THEREFORE CALLED UPON THE HIGH AUTHORITY TO DEFINE THAT CONCEPT PURSUANT TO THE SECOND PARAGRAPH OF ARTICLE 15 OF DECISION NO 2/57 . BUT THE HIGH AUTHORITY REPLIED THAT THE PROBLEM THUS EXPRESSED BY THE OCCF " WAS WRONGLY PUT ", IN VIEW OF THE FACT THAT THE OCCF HAD " FROM THE BEGINNING BY IMPLICATION ADOPTED THE CONCEPT OF OWN RESOURCES ACCORDING TO THE SEMANTIC MEANING OF THE TERM ", AND THAT THAT CRITERION SHOULD BE MAINTAINED .
IT FOLLOWS THAT THE HIGH AUTHORITY DID NOT INTEND TO TAKE A DECISION, AS IT HAD BEEN FORMALLY INVITED TO DO, BUT SIMPLY TO REAFFIRM THE PRINCIPLE WHICH, RIGHTLY OR WRONGLY, IT CONSIDERED TO EMERGE LOGICALLY FROM THE BASIC DECISION NO 2/57 .
THIS FINDING IS CONFIRMED BY THE FACT THAT BY ARTICLE 53 ( B ) OF THE TREATY AN AMENDMENT TO DECISION NO 2/57 WOULD HAVE REQUIRED THE PRIOR UNANIMOUS ASSENT OF THE COUNCIL OF MINISTERS, AND THAT CONDITION WAS NOT FULFILLED IN THIS CASE . MOREOVER, THERE IS NOTHING TO SUGGEST THAT THE HIGH AUTHORITY KNOWINGLY DISREGARDED THAT BINDING REQUIREMENT .
THESE CONSIDERATIONS ARE NOT INVALIDATED BY THE FACT THAT, IN ANSWER TO A FORMAL QUESTION FROM THE DEUTSCHE SCHROTTVERBRAUCHERGEMEINSCHAFT TO THE HIGH AUTHORITY ON 6 FEBRUARY 1958, THE MARKET DIVISION REPLIED BY LETTER OF 19 FEBRUARY 1958 THAT THE LETTER OF 18 DECEMBER 1957 WAS INDEED A " DECISION ".
IN FACT, THAT ANSWER FROM THE MARKET DIVISION EXPRESSES, AS IT ITSELF SAYS, THE OPINION OF AN OFFICIAL OF THE HIGH AUTHORITY AND DOES NOT NECESSARILY OF ITSELF REFLECT THE INTENTIONS OF THE HIGH AUTHORITY IN THE MATTER .
HOWEVER, THE VARIOUS SUBJECTIVE ELEMENTS SET OUT ABOVE CANNOT OF THEMSELVES BE DECISIVE IN DETERMINING THE NATURE OF THE SAID LETTER OF 18 DECEMBER 1957, FOR THE NATURE OF A MEASURE DEPENDS PRIMARILY ON ITS SUBJECT-MATTER AND CONTENT .
THE SAID LETTER APPEARS AS BEING AN INTERNAL INSTRUCTION ADDRESSED BY AN IMMEDIATE SUPERIOR TO THE DEPARTMENT UNDER HIS CHARGE AND INTENDED TO ORIENTATE THE ACTIVITIES OF THAT DEPARTMENT .
THUS, WHILE THE LETTER MAY HAVE GIVEN RISE TO IMMEDIATE OBLIGATIONS, IT CAN ONLY HAVE DONE SO AS REGARDS THE AGENCY TO WHICH IT WAS ADDRESSED AND NOT AS REGARDS UNDERTAKINGS CONSUMING FERROUS SCRAP . THIS VIEW OF THE MATTER, MOREOVER, IS SUPPORTED BY THE FACT THAT THE SAID LETTER OF 18 DECEMBER 1957 WAS ONLY PUBLISHED IN THE JOURNAL OFFICIEL ON 1 FEBRUARY 1958 .
P . 193
THEREFORE THE LETTER OF 18 DECEMBER 1957 IS NOT A A DECISION WITHIN THE MEANING OF THE TREATY .
( B ) DOES THE LETTER OF 17 APRIL 1958 CONSTITUTE A DECISION?
GENERALLY, THE CONSIDERATIONS DEVELOPED ABOVE IN RESPECT OF THE LETTER OF 18 DECEMBER 1957 ARE EQUALLY VALID FOR THE LETTER OF 17 APRIL 1958 .
MORE PARTICULARLY, ITS PURPOSE IS ONLY TO EXPLAIN TO THE OCCF THE REASONS WHY THE HIGH AUTHORITY, IN ITS LETTER OF 18 DECEMBER, APPROVED THE EXEMPTIONS GRANTED TO TWO SPECIFIC UNDERTAKINGS, SAYING THAT THE WORKS OF THOSE UNDERTAKINGS WERE " LOCALLY INTEGRATED WITH ONE OR SEVERAL WORKS NOT BELONGING TO THEM, IN WHICH FERROUS SCRAP IS RECOVERED ".
THUS THE LETTER DOES NOT SET OUT A NEW PRINCIPLE, BUT MERELY EXPRESSLY STATES A PRINCIPLE WHICH THE ADMINISTRATION HAS ALREADY APPLIED BY IMPLICATION IN IMPLEMENTING DECISION NO 2/57 .
THEREFORE THE LETTER OF 17 APRIL 1958 DOES NOT CONSTITUTE A DECISION WITHIN THE MEANING OF THE TREATY .
2 . MAY THE COURT EXAMINE THE LEGALITY OF THE PRINCIPLES SET OUT IN THE LETTERS OF 18 DECEMBER 1957 AND 17 APRIL 1958?
FROM THE MOMENT WHEN THE PRINCIPLES SET OUT IN THE ABOVEMENTIONED LETTERS WERE APPLIED BY THE ADMINISTRATION, THEY FORMED PART OF THE INTERPRETATION AND APPLICATION OF DECISION NO 2/57 .
THE HIGH AUTHORITY'S INTERPRETATION HAS AFFECTED THE APPLICANT'S RIGHTS FROM THE MOMENT WHEN THE AGENCIES TO WHICH THE LETTERS OF 18 DECEMBER 1957 AND 17 APRIL 1958 WERE ADDRESSED APPLIED THAT INTERPRETATION IN RESPECT OF IT .
THE QUESTION SHOULD THEREFORE BE EXAMINED WHETHER THE INTERPRETATION OF DECISION NO 2/57, AS IT APPEARS FROM THE LETTERS OF 18 DECEMBER 1957 AND 17 APRIL 1958, IS LEGAL .
3 . IS IT LEGAL TO SUBJECT GROUP FERROUS SCRAP TO EQUALIZATION?
P . 194
( A ) ARTICLE 2 OF DECISION NO 2/57 PROVIDES THAT " UNDERTAKINGS OF THE KIND DESCRIBED IN ARTICLE 80 OF THE TREATY WHICH CONSUME FERROUS SCRAP SHALL BE ASSESSABLE TO PAYMENT OF CONTRIBUTIONS " UNDER THE EQUALIZATION SCHEME .
ARTICLE 4 OF THE SAME DECISION STATES THAT THOSE CONTRIBUTIONS SHALL BE CALCULATED ON THE BASIS OF SUPPLIES OF " BOUGHT FERROUS SCRAP " WHEREAS " OWN RESOURCES " SHALL BE EXEMPT FROM EQUALIZATION .
THE DELIVERIES OF FERROUS SCRAP TO THE APPLICANT REGIE RENAULT CONSTITUTE PURCHASES, BECAUSE THERE IS AN AGREEMENT FOR THE PASSING OF PROPERTY AGAINST A PRICE .
BY REASON OF THE FACT, ACCORDING TO THE WORDING OF DECISION NO 2/57 SUCH SCRAP IS SUBJECT TO EQUALIZATION . THE APPLICANT REQUESTS EXEMPTION, TAKING THE VIEW THAT GROUP SCRAP SHOULD BE ASSIMILATED TO OWN RESOURCES . IT IS THEREFORE NECESSARY TO EXAMINE WHETHER SUCH ASSIMILATION IS JUSTIFIED .
( B ) AS APPEARS FROM A READING OF THE LETTER OF 18 DECEMBER 1957, THE HIGH AUTHORITY INTERPRETS THE CONCEPT OF " OWN RESOURCES " AS MEANING THAT IT IS ONLY SCRAP RECOVERED BY AN UNDERTAKING IN ITS OWN ESTABLISHMENTS BEARING THE SAME COMPANY NAME THAT IS CONSIDERED AS " OWN RESOURCES ", WHEREAS SCRAP SUPPLIED BY A WORKS RUN UNDER ANOTHER COMPANY NAME IS CONSIDERED AS BOUGHT SCRAP, EVEN IN THE CASE WHERE CLOSE FINANCIAL OR ADMINISTRATIVE LINKS EXIST BETWEEN THE SUPPLIER AND THE USER .
( C ) HOWEVER, IT IS NECESSARY TO EXAMINE WHETHER THE ASSESSING OF GROUP SCRAP TO THE LEVY - AND THE EXEMPTION FOR OWN ARISINGS - IS COMPATIBLE WITH THE PURPOSES OF THE FINANCIAL ARRANGEMENT CONSTITUTED BY THE EQUALIZATION SYSTEM .
( I ) ACCORDING TO THE APPLICANT, THERE IS NO VALID REASON FOR SUBJECTING GROUP SCRAP TO THE EQUALIZATION SYSTEM, BECAUSE THE OPERATIONS BETWEEN THE VARIOUS AFFILIATED UNDERTAKINGS TAKE PLACE OUTSIDE THE MARKET IN FERROUS SCRAP AND DO NOT, BY REASON OF THAT FACT, EXERCISE ANY INFLUENCE ON THE EVOLUTION OF PRICES .
ACCORDING TO THE APPLICANT, THE PURPOSE OF EQUALIZATION IS TO MAINTAIN THE PRICES OF FERROUS SCRAP AT A REASONABLE LEVEL, SO THAT ANY TRANSFER OF SCRAP NOT LIABLE TO HAVE REPERCUSSIONS ON THE LEVEL OF PRICES MUST BE EXEMPTED FROM EQUALIZATION .
IN FACT, THE PURPOSE OF EQUALIZATION IS TO MAINTAIN THE PRICE OF FERROUS SCRAP AT AN ACCEPTABLE LVEL; HOWEVER, IN ORDER TO ACHIEVE THAT OBJECTIVE, THE HIGH AUTHORITY HAS ESTABLISHED FINANCIAL ARRANGEMENTS THE PRINCIPLE OF WHICH IS TO ENSURE THAT THE EXCESS PRICE OF IMPORTED FERROUS SCRAP IS BORNE BY ALL THE CONSUMERS OF FERROUS SCRAP .
IT IS NOT PARTICIPATION IN THE FERROUS SCRAP MARKET WHICH GIVES RISE TO THE EQUALIZATION LEVY, BUT THE CONSUMPTION OF FERROUS SCRAP .
P . 195
ALL CONSUMERS ARE THEREFORE AUTOMATICALLY REQUIRED TO PAY EQUALIZATION CONTRIBUTIONS IN ORDER TO FINANCE THE EQUALIZATION FUND .
THEREFORE, THIS COMPLAINT PUT FORWARD BY THE APPLICANT MUST BE REJECTED .
( II ) HOWEVER, DECISION NO 2/57 PROVIDES FOR A DISTINCTION BETWEEN BOUGHT FERROUS SCRAP AND OWN RESOURCES, AND THIS CONSTITUTES, AS REGARDS THE LATTER, AN EXCEPTION TO THE GENERAL RULE MENTIONED ABOVE .
IT IS THEREFORE NECESSARY TO EXAMINE WHETHER THE EXONERATION OF OWN RESOURCES IS LEGAL .
THAT EXCEPTION PRIMARILY CONCERNS OWN ARISINGS FROM THE PRODUCTION OF STEEL BY THE UNDERTAKINGS SUBJECT TO THE JURISDICTION OF THE COMMUNITY .
IF THOSE ARISINGS WERE SUBJECT TO EQUALIZATION CONTRIBUTIONS, THERE WOULD BE A PROBABILITY OF CHARGING THE SAME QUANTITY OF FERROUS SCRAP TWICE OVER, WHICH WOULD BE MANIFESTLY UNJUST .
( D ) THE REASONING SET OUT ABOVE IS CONFIRMED BY THE CONCEPT OF DISCRIMINATION AS IT APPEARS IN PARTICULAR FROM THE SECOND PARAGRAPH OF ARTICLE 2 AND ARTICLES 3 ( B ), 60 AND 67 OF THE TREATY .
( I ) ON THE BASIS OF THE ABOVEMENTIONED PROVISIONS THERE MAY BE CONSIDERED AS DISCRIMINATORY IN PRINCIPLE AND, ACCORDINGLY, PROHIBITED BY THE TREATY, INTER ALIA, ANY ACTION OR INTERVENTION, EVEN ONE EMANATING FROM THE HIGH AUTHORITY, WHICH IS CALCULATED, BY SUBSTANTIALLY INCREASING DIFFERENCES IN PRODUCTION COSTS OTHERWISE THAN THROUGH CHANGES IN PRODUCTIVITY, TO PROVOKE AN APPRECIABLE DISEQUILIBRIUM IN THE COMPETITIVE POSITION OF THE UNDERTAKINGS CONCERNED .
IN OTHER WORDS, ANY INTERVENTION ATTEMPTING TO DISTORT OR ACTUALLY DISTORTING COMPETITION ARTIFICIALLY AND SIGNIFICANTLY MUST BE REGARDED AS DISCRIMINATORY AND INCOMPATIBLE WITH THE TREATY, WHILST MEASURES WHICH TAKE INTO ACCOUNT THE INTERNAL ORGANIZATION OF AN UNDERTAKING AND THE USE BY IT OF ITS OWN RESOURCES CANNOT BE REGARDED AS DISCRIMINATORY .
THE USE OF ITS OWN ARISINGS BY A SINGLE UNDERTAKING PRODUCING STEEL AND USING FERROUS SCRAP AMOUNTS TO A PRODUCTION RE-CYCLING OF ONE OF ITS BY-PRODUCTS .
THIS BEING SO, SUCH A USE IN THE PROCESS OF THE PRODUCTION OF STEEL FROM FERROUS SCRAP CLEARLY REPRESENTS AN INCREASE IN THE QUANTITY OF STEEL OBTAINED FROM THE SAME QUANTITY OF FERROUS SCRAP, WHICH HAS ALREADY BEEN SUBJECTED TO EQUALIZATION . IT THUS REPRESENTS AN ACQUIRED INCREASE IN PRODUCTIVITY .
P . 196
TO SAY THAT AN INTERVENTION ENCOURAGING THOSE INTERNAL MEASURES OF ECONOMY DISTORTS COMPETITION IS THE VERY OPPOSITE OF THE TRUTH . SUCH AN INTERVENTION FAVOURS CHANGES IN PRODUCTIVITY IN THE DIRECTION OF GREATER PRODUCTIVITY, BY THE FORM OF COMPETITION DESCRIBED IN GERMAN AS " LEISTUNGSWETTBEWERB ", AND THEREFORE ACCORDS WITH THE TREATY .
MOREOVER IT APPEARS FROM ANNEX II TO THE ECSC TREATY, SECOND PARAGRAPH OF ( B ), THAT " UNDERTAKINGS'OWN ARISINGS " ENJOYS PRIVILEGED TREATMENT EVEN IN THE CASE OF A DIRECT INTERVENTION UNDER ARTICLE 59 OF THE TREATY . THEREFORE A FORTIORI THEY MUST ALSO RECEIVE PRIVILEGED TREATMENT IN THE APPLICATION OF INDIRECT MEASURES OF INTERVENTION SUCH AS THOSE AUTHORIZED BY ARTICLE 53 .
IT FOLLOWS FROM EVERYTHING THAT HAS BEEN SAID ABOVE THAT THE EXEMPTION OF OWN RESOURCES IS NOT DISCRIMINATORY AND IS THEREFORE LEGITIMATE .
( II ) TO ASSIMILATE GROUP SCRAP TO OWN ARISINGS WOULD BE TO GO BEYOND THE MEANING OF AND THE REASON FOR THE EXEMPTION AND WOULD CONSTITUTE A DISCRIMINATORY ADVANTAGE AS REGARDS OTHER UNDERTAKINGS .
THE LOWERING OF PRODUCTION COSTS CONSEQUENT UPON AN EXONERATION FOR GROUP SCRAP WOULD, IN THE WORDS OF ARTICLE 67 OF THE TREATY, BE LIABLE SUBSTANTIALLY TO INCREASE DIFFERENCES IN PRODUCTION COSTS AS BETWEEN THOSE UNDERTAKINGS AND THOSE WHICH ALSO PRODUCE STEEL FROM FERROUS SCRAP BUT WHICH ARE NOT INTEGRATED WITH AN UNDERTAKING PRODUCING THAT RAW MATERIAL .
THAT INCREASE IN THE DIFFERENCES IN PRODUCTION COSTS WOULD NOT RESULT FROM CHANGES IN PRODUCTIVITY, BUT WOULD BE THE EFFECT OF CONTINGENT, GEOGRAPHICAL, ADMINISTRATIVE OR FINANCIAL TIES, WHICH ARE AT THE BASIS OF THE CONCEPT OF A " GROUP ". IT MUST BE OBSERVED FROM THE SCHEME OF THE TREATY AND FROM ITS FUNDAMENTAL PRINCIPLES THAT THE WORD " PRODUCTIVITY " REFERS EXCLUSIVELY TO THE RESULTS OF THE EFFECTS MADE BY AN UNDERTAKING . IN PARTICULAR, IT MUST BE UNDERSTOOD AS DISTINCT FROM AND AS AGAINST ANY IMPROVEMENT IN THE COMPETITIVE POSITION OF AN UNDERTAKING WHICH IS DUE EITHER TO INTERVENTIONS OF PUBLIC AUTHORITIES, OR TO THE CREATION OF A CARTEL OR A CONCENTRATION, BECAUSE ALL THESE OPERATIONS, EVEN WHERE AUTHORIZED OR CAPABLE OF BEING AUTHORIZED, ARTIFICIALLY ALTER THE NORMAL EFFECT OF COMPETITION .
( E ) IT WOULD BE MANIFESTLY CONTRARY TO THE REQUIREMENTS OF THE TREATY IF, AS A RESULT OF AN INTERVENTION ON THE PART OF THE HIGH AUTHORITY, THE PRODUCTION COSTS OF STEEL MANUFACTURED IN WHOLE OR IN PART FROM FERROUS SCRAP WERE TO DEPEND ON THE LEGAL, ADMINISTRATIVE OR FINANCIAL STRUCTURE OF INDUSTRIAL GROUPS .
THE CHANGES IN THE LEGAL STRUCTURE OF THE GROUP, THE EXISTENCE OF WHICH IS STRESSED BY THE APPLICANT, ONLY GO TO SHOW THAT SUCH CHANGES ARE ARBITRARY AND AVAILABLE UPON A MOMENT'S NOTIVE, AND TO PREVENT THERE BEING SEEN THEREIN ANY FACTOR SPECIFIC TO THE PRODUCTIVITY OF THE STEEL-PRODUCING UNDERTAKING .
P . 197
( F ) FOR ALL THESE REASONS, ALTHOUGH THE EXONERATION OF OWN ARISINGS IS COMPATIBLE WITH THE PROVISIONS OF THE TREATY, AN EXONERATION FOR GROUP SCRAP WOULD BRING ABOUT DISCRIMINATION PROHIBITED BY ARTICLE 4 OF THE TREATY .
IN VIEW OF THAT FACT, THE LATTER EXONERATION MUST ITSELF BE TAKEN TO BE PROHIBITED BY THE TREATY, WITHOUT ITS BEING NECESSARY, IN THE PRESENT CASE, TO RULE ON THE QUESTION WHETHER OR NOT FERROUS SCRAP ORIGINATING FROM AN UNDERTAKING WHICH IS NOT A PRODUCER OF STEEL AND IS NOT, THEREFORE, SUBJECT TO THE JURISDICTION OF THE COMMUNITY SHOULD, FOR THAT REASON, BE EXEMPT FROM EQUALIZATION, EVEN IF IT FORMS PART OF A GROUP WITH THE UNDERTAKING USING THE FERROUS SCRAP OR IS RUN UNDER THE SAME COMPANY NAME .
IT RESULTS FROM THE FOREGOING CONSIDERATIONS THAT THE DEFENDANT ACTED LEGALLY IN APPLYING THE PRINCIPLE THAT SO-CALLED GROUP FERROUS SCRAP MUST BE CONSIDERED AS BOUGHT FERROUS SCRAP AND, THEREFORE, AS SUBJECT TO EQUALIZATION, AND IN REAFFIRMING THAT PRINCIPLE IN ITS LETTER OF 18 DECEMBER 1957 .
4 . THE ARGUMENTS BASED ON THE EXEMPTIONS ALREADY GRANTED .
THE APPLICANT HAS ALSO ALLEGED THAT THE HIGH AUTHORITY HAS EXONERATED CERTAIN UNDERTAKINGS IN SO FAR AS THEY CONSUME FERROUS SCRAP FROM WORKS WHICH, WITHOUT BEARING THE SAME COMPANY NAME AS THE CONSUMER WORKS, ARE " LOCALLY INTEGRATED " WITH THE LATTER .
HOWEVER, THE APPLICANT HAS NOT RAISED THE QUESTION WHETHER SUCH EXONERATIONS ARE COMPATIBLE WITH THE PURPOSE AND THE SCHEME OF THE EQUALIZATION SYSTEM .
MOREOVER THAT QUESTION CANNOT BE DECIDED IN THE CONTEXT OF THE PRESENT DISPUTE .
THE FACT THAT THE HIGH AUTHORITY OR ITS DEPARTMENT MAY, IN CERTAIN CASES, HAVE GIVEN TOO WIDE AN INTERPRETATION OF THE CONCEPT OF " OWN ARISINGS " CANNOT JUSTIFY THE GRANT OF AN EXEMPTION FROM THE LEVY IN OTHER MORE OR LESS COMPARABLE CASES, SINCE SUCH GRANT IS CONTRARY TO THE VERY PRINCIPLES OF THE EQUALIZATION SYSTEM .
ON THOSE GROUNDS, SINCE THE REQUEST FOR EXEMPTION SUBMITTED BY THE APPLICANT IS UNFOUNDED, ITS ACTION FOR FAILURE TO ACT IN RESPECT OF THE IMPLIED DECISION OF REFUSAL MUST BE DISMISSED .
Decision on costs
UNDER THE TERMS OF ARTICLE 60 ( 1 ) OF THE RULES OF PROCEDURE OF THE COURT OF JUSTICE OF THE ECSC, THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS .
IN THE PRESENT CASE THE APPLICANT HAS FAILED IN ALL ITS SUBMISSIONS . IT MUST THEREFORE BE ORDERED TO BEAR THE COSTS .
Endorsements
UPON READING THE PLEADINGS;
UPON HEARING THE REPORT OF THE JUDGE-RAPPORTEUR;
UPON HEARING THE PARTIES;
UPON HEARING THE OPINION OF THE ADVOCATE-GENERAL;
HAVING REGARD TO ARTICLES 2, 3, 4, 15, 33, 35, 53, 59, 60, 67 AND 80 OF THE ECSC TREATY AND ANNEX II THERETO;
HAVING REGARD TO THE PROTOCOL ON THE STATUTE OF THE COURT OF JUSTICE OF THE ECSC;
HAVING REGARD TO THE RULES OF PROCEDURE OF THE COURT OF JUSTICE OF THE ECSC, IN PARTICULAR ARTICLES 60 AND 85,
Operative part
THE COURT
HEREBY :
1 . DISMISSES THE APPLICATION DIRECTED AGAINST THE IMPLIED DECISION OF REFUSAL RESULTING FROM THE ABSENCE OF A REPLY FOR MORE THAN TWO MONTHS BY THE DEFENDANT TO THE APPLICANT'S LETTER OF 23 JULY 1958 AS UNFOUNDED;
2 . DISMISSES THE APPLICATION DIRECTED AGAINST THE LETTER FROM THE MARKET DIVISION OF THE HIGH AUTHORITY OF 31 JULY 1958 AS INADMISSIBLE .
3 . ORDERS THE APPLICANT TO BEAR THE COSTS .