61984C0067
OPINION OF MR ADVOCATE GENERAL MANCINI
delivered on 21 May 1985 (
*1
)
Mr President,
Members of the Court,
1.
By application submitted on 11 March 1984 Sideradria SpA, an Italian undertaking engaged in the production of concrete reinforcing bars, which claims to be in particularly serious economic and financial straits, asks the Court to annul or to reduce a fine which in its view is not only unfair but also constitutes a threat to its survival and which was imposed on it by the Commission for exceeding the delivery quota for the third quarter of 1981.
Like any other Community steel producer, the applicant is subject to the quota sytem, whereby the Community controls, in the interests of the entire European steel industry, the manufacture and marketing of iron and steel products. The rules which govern that market organization are well known and, in particular, those which are relevant to this dispute are laid down in Commission Decision 1831/81/ECSC of 24 June 1981 (Official Journal 1981, L 180, p. 1), as subsequently amended. In brief, when it is faced with a serious crisis in the steel sector, the Commission seeks to restore the balance on the market by fixing at quarterly intervals the production quotas and the parts thereof which any undertaking may assign within the Common Market. The production quotas are calculated on the basis of the undertaking's highest production in 12 consecutive months over a specific period of time (in this case Sideradria indicated for the three-year period from 1977 to 1980 its production figures for 1979). The share of production which is sold within the Common Market during those months — known as the ‘best’ months — serves as a basis for the calculation of the delivery quotas.
2.
On 10 August 1981, in accordance with Decision 1831/81 and on the basis of the figures given by Sideradria, the Commission notified the applicant of the quotas allocated to it for the third quarter of that year. The production quota totalled 9798 tonnes, including 4254 tonnes which could be sold. In verifying whether those quotas were being adhered to, however, the Commission established that, during the quarter in question, Sideradria's production had exceeded the limits specified, rising to 11989 tonnes of which 10489 tonnes had been marketed within the Community.
When asked by the Commission to explain those infringements, Sideradria replied on 8 March 1982 that, as regards the excess production, it had initially reported its reference figures incorrectly and, for that reason, had applied for the adjustment of the quota by letter of 12 October 1981; and, secondly, that although, as stated in that letter, the delivery quota had been calculated by reference to the 12 ‘best’ months indicated by the applicant to the Commission (that is, for 1979), the Commission did not take account of the following factors: (i) in 1979 the applicant had exceptionally exported over 70% of its production to nonmember countries; (ii) between 1 July and 31 December 1977 it was in liquidation and had not therefore manufactured or sold any of its products; (iii) in 1978, after slowly resuming production, it had exported only 14% of its output to nonmember countries; and (iv) since May 1980 it had no longer delivered its products outside the Community.
Against that background, it seemed to the applicant ‘illogical that by a quirk of fate’ — that is to say as a result of the fact that its best months of production coincided with the period in which its exports outside the Community were at their highest — it should be penalized ‘so heavily that it had to close down because its quotas for delivery on the Common Market were so small’. In those circumstances, Sideradria again asked the Commission to adjust the quotas allocated to it, in the belief that, if the quotas were adjusted, the infringement with which it was charged would be exposed as baseless. On 11 June 1982, at a meeting with the Commission, Sideradria relied on those grounds in its defence, emphasizing that it had encountered considerable difficulties as a result of the fact that the delivery quotas allocated to it were tiny by comparison with its share of production.
Having regard to those circumstances and to the alterations made to the reference figures, the Commission adopted the decision of 19 August 1982 which adjusted Sideradria's production figures retroactively and hence expunged the infringement in question. However, no action was taken as regards the size of, and the excess over, the delivery quota. In that respect the Commission pointed out that Sideradria had not provided any basis for adjustment. Hence, in the Commission's own words, ‘that infringement had to be penalized’. Since then, however, almost two years elapsed and no penalties were imposed.
The tale of what happened in that period is soon told. To begin with, a few months after the entry into force of Decision 1831/81 the Commission found that many undertakings had encountered serious difficulties in abiding by the percentage of deliveries allowed within the Community. Accordingly, by Decision 2804/81/ECSC of 23 September 1981 (Official Journal 1981, L 278, p. 1), the Commission adopted new measures designed to make the system for calculating delivery quotas more responsive to the changing commercial requirements of undertakings. Thus, a second paragraph was added to Decision 1831/81 which provides as follows: ‘if an undertaking can prove that the reference quantities fixed in accordance with paragraph 1 have caused it grave difficulty, the Commission may make ... ... adjustments to the reference quantities for the undertaking concerned in cases where there has been a change of more than 20% in the percentage of the undertaking's total deliveries as compared with its total production owing to differences [in] the undertaking's sales pattern’ by comparison with the 12 best months.
In a letter sent to Sideradria on 3 December 1982, the Commission took formal note that the conditions referred to in the new paragraph 2 were satisfied since the reference quantity allocated created ‘serious difficulties... of a financial kind for the undertaking which is compelled to produce for storage’. Consequently, it increased Sideradria's delivery quota for the fourth quarter of 1982. However, the quotas fixed for the previous quarters remained unchanged.
Following that decision, which is not contested by the applicant, the parties continued to correspond and to hold meetings. In particular, it is clear from the minutes of the hearings of 19 February 1983 and 23 January 1984, at which Sideradria's representative was given an opportunity to express his views, that, in connection with the excess over the delivery quota for the third quarter of 1981, the Commission gave due consideration to Sideradria's explanation and, aware of the applicant's difficult financial position, did ‘ the utmost to help it’. The Commission stated however that although the parts of the quotas which could be delivered within the Community had ‘proved to be insufficient, that was attributable to the figures reported by Sideradria and to the fact that it could not benefit from other provisions for adjustment’.
Finally, by decision of 26 January 1984, the Commission formally notified Sideradria that it had infringed Decision 1831/81 by exceeding the delivery quota for the third quarter of 1981 by 6107 tonnes; moreover, having regard to the gravity of the infringement (the deliveries were more than twice as large as the quota), the Commission imposed on Sideradria under the second paragraph of Article 12 of that decision, a fine of 503827 ECU calculated at the rate of 75 ECU for each tonne in excess, increased by 10%.
3.
In its application to the Court, Sideradria is asking primarily for a declaration that the decision of 26 January 1984 is void and, in the alternative, for a reduction of the fine. In support of its first claim, the applicant relies on three grounds: (a) manifest unfairness of the contested decision and illogicality of the statement of reasons on which it is based; (b) failure to take decisive facts into account; and (c) breach of the principle of the protection of legitimate expectation.
I do not believe it is necessary to summarize the arguments put forward by the applicant in support of the first two submissions. As the Commission has pointed out, those submissions call in question the criteria adopted for the calculation of the reference quantities which serve as a basis for the determination of the production and delivery quotas. Those criteria, however, are set out in Decision 1831/81 which has been authoritative for some considerable time and the legality of which is not therefore subject to direct review. Moreover, to contest those criteria is tantamount to contesting the quotas calculated on the basis thereof and since Sideradria did not challenge at the proper time the decision establishing them, it can certainly not criticize them now, that is, in proceedings for a declaration that a measure imposing a penalty is void. In that respect the case-law of the Court is unequivocal: see, most recently, the judgment of 29 February 1984 in Case 270/82 Estel NVv Commission [1984] ECR 1195.
The first two submissions must therefore be rejected. As regards the third submission, Sideradria maintains that it was not warned in due time, that is, during the third quarter of 1982, that it had exceeded its quotas. Furthermore, the procedure which culminated in the notification of the fine lasted almost two years and was characterized by very long periods of silence which raised the hopes of the management that a favourable solution would be found. In those circumstances, the applicant maintains, the imposition of a fine constitutes a breach of the principle of the protection of legitimate expectation.
I am not swayed by that argument. I would observe in the first place that the Commission is not obliged to give a warning to undertakings which are exceeding their delivery quotas (and it is difficult to see how such a duty could be discharged in time). I would add that the aim of the principle relied upon by the applicant is to safeguard an undertaking's legitimate expectations and that certainly cannot be said of the expectations of an undertaking which, having knowingly infringed overriding rules, interprets the passage of time and silence on the part of the Commission as signs that the latter has waived its right to impose a penalty. Since this submission is also unfounded, the applicant's principal claim cannot be upheld.
4.
I now turn to the alternative claim for a reduction of the fine. Sideradria relies on two arguments in support of that claim. It maintains in the first place that, in preparing its defence against the charges initially brought by the Commission, Sideradria's management realized that it had made a mistake. In the reference year, 1979, part of the production which it believed had been exported to markets outside the Community had in fact been sold in Italy. The Commission was immediately informed of that mistake but took no account of it in imposing the fine. Yet Sideradria maintains that a mistake was undoubtedly made, as is clear from its own tax returns. The relevant documents, which were produced before the Court as illustrations, show that the production sold in 1979 was to a large extent subject to VAT, that is, a tax to which transactions carried out on markets outside the Community are not liable under Italian law.
However, when requested by the Court to explain that mistake and to demonstrate that the deliveries in question were actually effected in Italy, Sideradria was unable either to justify its conduct or to furnish the necessary proof. Moreover, the Commission has successfully disputed, on the basis of the relevant Italian legislation, the applicant's contention that the documents submitted rule out the delivery of the goods, which were ostensibly manufactured in Italy, outside the Common Market. In those circumstances, I do not consider that the facts relied upon by the applicant are sufficient to justify a reduction of the fine.
The applicant's second argument is of a different nature. At the hearing, Sideradria recalled that on 19 December 1984 the Commission again dealt it a severe blow (once again for failure to comply with its delivery quotas), by imposing on it a fine of 768404 ECU. In stating the reasons for its decision, whilst emphasizing that Sideradria had repeated an infringement and that the second infringement was more serious than the first, the Commission claims to have calculated the fine at the rate of 20 ECU for each tonne sold in excess in view of the applicant's extremely serious financial position. Sideradria argues that since the financial circumstances which induced the Commission to treat the second infringement more leniently already existed at the time of the first infringement (which was penalized by the imposition of a fine of 75 ECU per tonne, increased by 10%), it is difficult to understand why the fine imposed in respect of the first infringement was not calculated at the rate of 20 ECU per tonne or, since at the time the undertaking had ‘a clean record’, at an even lower rate.
That argument, although it has a certain appeal, is in my view unfounded. To be penalized a second time in respect of a fresh infringement of the delivery quota certainly does not have the effect of mitigating the gravity of the conduct with which the applicant is charged. On the contrary, it is a factor which is entirely unrelated to the facts on which the contested decision is based and it is in the light of those facts alone that the Court may review the penalty. In any event, although in 1982 Sideradria had a clean record and was in financial straits, it is also true that in its decision the Commission took account of those factors (see the last indent of the first recital) and that the fine was increased only because the quota had been exceeded by a substantial amount.
Does it follow from that conclusion that the alternative claim must also fail? Not necessarily. I would remind the Court that during the administrative procedure the Commission acknowledged that the delivery quota allocated had not proved sufficient, although it attributed this to the figures reported by Sideradria and to the fact that the applicant could not benefit from other provisions for adjustment. The first ground is incontestable (as, in more general terms, is the existence of contradictions in the applicant's attitude towards the supervisory body). The second ground is also valid, but it leaves the Court some scope for granting equitable relief.
The Commission did not include in Decision 1831/81 a provision (such as that subsequently introduced by the measure adopted on 23 September 1981) enabling it, in fixing delivery quotas, to avert the serious problems created for iron and steel undertakings by the system of calculation hitherto applied. Moreover, if Sideradria's otherwise extremely careless management deserves any credit at all, it is for having always promptly notified the Commission of its difficulties and for providing the latter with all the relevant information. Hence it is well known that from 1977 to 1980 Sideradria's production was interrupted for long periods and, for that very reason, sales could not be the subject of rational planning. That is why the selection of 1979 as the reference year for the determination of quotas, whilst not corresponding to Sideradria's new commercial policy, was the only possible course of action or, better still, an enforced choice.
There is no doubt that, on the basis of the figures available to the Commission and in the absence of any other information from Sideradria, the quota could not be adjusted. However, it appears that in penalizing the applicant for exceeding its quota, the Commission did not take proper account either of the situation which I mentioned earlier (Sideradria referred somewhat emphatically to ‘a quirk of fate’ though in so doing it relied on sound arguments) or of the fact that it had itself ruled out, at least at the outset, any possibility of adjusting the quotas allocated to undertakings in difficulty (see, in that regard, the Court's judgment of 14 February 1984 in Case 2/83 Alfirv Commission [1984] ECR 799).
In the light of those circumstances, I believe that Sideradria's alternative claim should be upheld. However, those circumstances do not justify a reduction which expunges or obscures the gravity of the infringement committed by the applicant. I therefore consider that a fine of 80% of the amount imposed by the Commission is equitable.
5.
On the basis of the foregoing considerations, I suggest that the Court should decide the application submitted on 11 March 1984 by Sideradria-Industria Metallurgica SpA, having its registered office in Adria (Rovigo) Italy, by
(a)
dismissing the claim for a declaration that the contested decision is void and
(b)
reducing the fine to 80% of the amount imposed by the Commission.
I suggest that the Court should order the parties to bear their own costs in accordance with Article 69 (3) of the Rules of Procedure.
(
*1
)	Translated from the Italian.