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( 1 ) OJ NO L 268 , 11 . 10 . 1980 , P . 25 .

( 2 ) OJ NO C 264 , 11 . 10 . 1980 , P . 2 .

( 1 ) OJ NO L 246 , 27 . 9 . 1977 , P . 1 .

COMMISSION DECISION NO 2794/80/ECSC

OF 31 OCTOBER 1980

ESTABLISHING A SYSTEM OF STEEL PRODUCTION QUOTAS FOR UNDERTAKINGS IN THE IRON AND STEEL INDUSTRY

THE COMMISSION OF THE EUROPEAN

COMMUNITIES ,

HAVING REGARD TO THE TREATY ESTABLISHING THE EUROPEAN COAL AND STEEL COMMUNITY , AND IN PARTICULAR ARTICLES 47 AND 58 THEREOF ,

CONSIDERING THE FOLLOWING POINTS :

1 . DECLINE IN DEMAND

IN THE THIRD QUARTER OF 1980 , DEMAND FOR STEEL FELL ABRUPTLY BOTH ON THE COMMUNITY MARKET AND ON THE WORLD MARKET , TOTAL ORDERS FALLING SHARPLY BY 20 % IN THE THIRD QUARTER OF 1980 COMPARED WITH THE THIRD QUARTER OF 1979 , A QUARTER IN WHICH ORDERS WERE ALREADY AT A LOW LEVEL ; ORDERS FROM THE COMMUNITY MARKET FELL BY 25 % . OWING TO THE ECONOMIC DOWNTURN , THE OUTLOOK FOR THE FOURTH QUARTER OF 1980 AND THE FIRST QUARTER OF 1981 IS SUCH THAT A RECOVERY IS UNLIKELY .

2 . EXISTENCE OF A PERIOD OF MANIFEST CRISIS

THE UTILIZATION RATE OF COMMUNITY STEEL UNDERTAKINGS , WHICH WAS APPROXIMATELY 70 % IN THE SECOND QUARTER OF 1980 , FELL TO 58 % IN SEPTEMBER , THE LOWEST RATE EVER RECORDED IN THE COMMUNITY . THE UNDERTAKINGS ' FORECASTS INDICATE THAT THE RATE WILL FALL AGAIN IN THE FOURTH QUARTER , POSSIBLY TO BELOW 55 % . THE FACT THAT THE REDUCTION IN PRODUCTION VARIES A GREAT DEAL FROM ONE UNDERTAKING OR REGION TO ANOTHER IS CAUSING ECONOMIC AND SOCIAL IMBALANCE BETWEEN UNDERTAKINGS AND REGIONS .

BETWEEN JANUARY AND SEPTEMBER 1980 , THE FALL IN DEMAND RESULTED IN A SLUMP IN STEEL PRICES IN THE COMMUNITY , THEY FELL BY 13 % WHILE PRODUCTION COSTS INCREASED BY 5 % IN THE SAME PERIOD . THE FINANCIAL SITUATION OF THE UNDERTAKINGS DETERIORATED FURTHER , THEREFORE , AND IRREPARABLE DAMAGE TO THE STRUCTURE OF THE EUROPEAN IRON AND STEEL INDUSTRY IS LIKELY TO RESULT .

THE COMMISSION THEREFORE CONSIDERS THAT THE EUROPEAN IRON AND STEEL INDUSTRY IS NOW IN A SITUATION IN WHICH THE ATTAINMENT OF THE OBJECTIVES SET OUT IN ARTICLE 3 OF THE TREATY , IN PARTICULAR THE MODERNIZATION AND RESTRUCTURING OF PRODUCTION , THE IMPROVEMENT OF WORKERS ' CONDITIONS AND ORDERLY SUPPLIES TO THE COMMON MARKET , IS SERIOUSLY JEOPARDIZED . THE COMMUNITY IS THEREFORE CONFRONTED WITH A PERIOD OF MANIFEST CRISIS .

3 . THE MEANS OF ACTION PROVIDED FOR IN ARTICLE 57 ARE NOT SUFFICIENT TO COPE WITH THE CRISIS .

THE COMMISSION CANNOT TAKE STEPS TO INFLUENCE GENERAL CONSUMPTION IN THE PRESENT ECONOMIC SITUATION .

THE STEEL UNDERTAKINGS HAVE INCREASINGLY FAILED TO FULFIL THEIR INDIVIDUAL DELIVERY COMMITMENTS AND HAVE REFUSED TO COMMIT THEMSELVES FOR THE LAST QUARTER OF 1980 . THE INDIRECT COURSES OF ACTION AVAILABLE TO THE COMMISSION HAVE PROVED INEFFECTIVE OR INSUFFICIENT IN THE PRESENT SITUATION .

IT IS THEREFORE NECESSARY TO INTERVENE DIRECTLY , BY MEANS OF BINDING MEASURES RELATING TO PRODUCTION , IN ORDER TO RESTORE BALANCE BETWEEN SUPPLY AND DEMAND .

THE COMMISSION MUST THEREFORE ESTABLISH A SYSTEM OF PRODUCTION QUOTAS IN ACCORDANCE WITH THE PROVISIONS SET OUT IN ARTICLE 58 .

IN THE SAME CONTEXT THE COMMISSION HAS MADE PROPOSALS TO THE COUNCIL FOR SUPPORT MEASURES AND ADDITIONAL BUDGETARY RESOURCES TO ASSIST WORKERS IN THE IRON AND STEEL INDUSTRY .

4 . DETERMINATION OF QUOTAS

THE QUOTAS SHOULD BE SET ON A QUARTERLY BASIS TO ENABLE THE UNDERTAKINGS TO DRAW UP THEIR PRODUCTION PROGRAMMES AND ALSO TO ENABLE THE COMMISSION , WHEN SETTING NEW QUOTAS FOR THE FOLLOWING QUARTER , TO TAKE ACCOUNT OF FLUCTUATIONS IN SUPPLY AND DEMAND AND OF EXPERIENCE GAINED . FURTHERMORE , AS THE DEMAND SITUATION ON THE MARKETS FOR THE VARIOUS CATEGORIES OF ROLLED PRODUCTS IS NOT IDENTICAL , DIFFERENT QUOTAS SHOULD BE SET FOR THE VARIOUS GROUPS OF PRODUCTS AND ALSO FOR CRUDE STEEL .

THESE QUOTAS SHOULD BE CALCULATED ON THE BASIS OF THE RESPECTIVE REFERENCE PRODUCTION FIGURES OF EACH UNDERTAKING . THE PERIOD SHOULD BE SUFFICIENTLY RECENT TO REFLECT ACTUAL STRUCTURES ; IS SHOULD BE SUFFICIENTLY LONG TO MAKE IT POSSIBLE TO SELECT MONTHS NOT AFFECTED BY TECHNICAL INCIDENTS OR STRIKES . IT IS THEREFORE APPROPRIATE THAT THE REFERENCE PERIODS SHOULD CONSIST OF THE MONTHS OF THE QUARTER IN QUESTION WITH THE HIGHEST PRODUCTION FIGURES , IN THE PERIOD FROM JULY 1977 TO JUNE 1980 .

HOWEVER , IF DURING THAT PERIOD THE AVERAGE RATE OF UTILIZATION OF THE PRODUCTION CAPACITY OF AN UNDERTAKING - ON ACCOUNT OF THE BASES SELECTED TO DRAW UP ITS VOLUNTARY DELIVERY PROGRAMMES - WAS SUBSTANTIALLY BELOW THE COMMUNITY AVERAGE , ACCOUNT SHOULD BE TAKEN OF THIS AND THE REFERENCE PRODUCTION SHOULD BE ADJUSTED ACCORDINGLY .

ACCOUNT SHOULD ALSO BE TAKEN OF NEW FACILITIES BROUGHT INTO SERVICE AFTER JUNE 1980 , CONCERNING WHICH THE COMMISSION HAS NOT ISSUED AN UNFAVOURABLE OPINION , FOR THE CORRESPONDING INVESTMENT PROGRAMME .

SIMILARLY , TO ENSURE THAT THE SYSTEM OF PRODUCTION QUOTAS DOES NOT COMPRISE THE RESTRUCTURING SUCCESSFULLY CARRIED OUT BY CERTAIN UNDERTAKINGS SINCE THE BEGINNING OF THE CRISIS , THE REFERENCE PRODUCTION LEVELS SHOULD BE ADJUSTED IN THE LIGHT OF THE ACTUAL MARKET SITUATION OF THESE UNDERTAKINGS .

THE QUOTAS SHOULD BE IMPOSED ON ALL STEEL UNDERTAKINGS WITHIN THE MEANING OF ARTICLE 80 OF THE TREATY , WITH THE EXCEPTION OF SMALL UNDERTAKINGS THE OUTPUT OF WHICH DOES NOT AFFECT THE MARKET IN ANY SIGNIFICANT WAY , AND OF UNDERTAKINGS OF WHICH THE PRODUCTION OF ECSC PRODUCTS IS CONFINED TO LIQUID CASTING STEEL ON ACCOUNT OF THE LIMITED ACTIVITY OF THE COMMISSION IN THIS SECTOR .

THESE SMALL UNDERTAKINGS SHOULD , HOWEVER , BE SUBJECTED TO THE OBLIGATIONS CONCERNING STATISTICAL REPORTS .

PRODUCTION ABATEMENT RATES WILL BE CALCULATED IN ORDER TO ADJUST PRODUCTION TO THE DEMAND EXPECTED IN THE QUARTER IN QUESTION . THE SAME PRODUCTION ABATEMENT RATES WILL BE APPLIED TO THE PRODUCTION FIGURES OF EACH UNDERTAKING IN ORDER TO ENSURE THAT THE REDUCTION IN PRODUCTION IS SHARED OUT EQUITABLY .

IT IS CLEAR FROM STUDIES CARRIED OUT BY THE COMMISSION , IN CONJUNCTION WITH THE UNDERTAKINGS AND THEIR TRADE ASSOCIATIONS , THAT THE CHANGE IN THE LEVEL OF DEMAND WILL DICTATE A LARGER RATE OF REDUCTION IN THE FIRST QUARTER OF 1981 THAN HAS BEEN FIXED FOR THE FOURTH QUARTER OF 1980 .

IT IS NECESSARY TO IMPLEMENT THE QUOTA SYSTEM AS QUICKLY AS POSSIBLE AND TO AVOID CERTAIN UNDERTAKINGS GAINING PROFIT FROM ABNORMAL INCREASES IN PRODUCTION DURING OCTOBER 1980 . THE UNDERTAKINGS BECAME AWARE OF THIS NEED BY 7 OCTOBER AT THE LATEST , ON WHICH DATE THE MATTER WAS PLACED BEFORE THE COUNCIL . IN ADDITION , THE UNDERTAKINGS WERE INFORMED BY COMMISSION DECISION NO 2613/80/ECSC ( 1 ) AND THE COMMUNICATION OF 11 OCTOBER 1980 ( 2 ) THAT THE PRODUCTION QUOTAS WILL INCLUDE THE FOURTH QUARTER OF 1980 , AND THEREFORE OCTOBER . THIS BEING THE CASE , NO LEGITIMATE INTEREST OF THE UNDERTAKINGS RUNS COUNTER TO THE INCLUSION OF OCTOBER 1980 .

5 . PRODUCTS EXEMPT FROM PRODUCTION QUOTAS

THE NET INCREASE IN DEMAND FOR TUBES AND CERTAIN STEEL PRODUCTS JUSTIFIES EXEMPTION OF THESE PRODUCTS AND CERTAIN OF THEIR PRECURSOR PRODUCTS FROM PRODUCTION QUOTAS . OTHER PRECURSOR PRODUCTS , HOWEVER , WARRANT A SYSTEM SIMILAR TO THAT APPLYING TO CERTAIN SPECIAL STEELS ( SEE POINT 5 . A ); UNTIL THE COMMISSION HAS RECEIVED ALL THE INFORMATION NEEDED FOR PRECISE CALCULATIONS IN THIS MATTER . A TRANSITIONAL SYSTEM IS TO BE SET UP FOR THE FOURTH QUARTER OF 1980 .

5 . A . SYSTEM FOR CERTAIN HIGH-GRADE AND SPECIAL STEELS

IN VIEW OF THE SPECIAL POSITION OF SMALL AND MEDIUM-SIZED PRODUCERS MANUFACTURING ONLY HIGH-GRADE AND SPECIAL STEELS AND LIQUID STEEL FOR HIGH-GRADE AND SPECIAL STEEL CASTINGS , THESE PRODUCTS MAY BE LEFT OUTSIDE THE SCOPE OF THE COMPULSORY PRODUCTION QUOTAS .

THE MORE FAVOURABLE TREND OF DEMAND FOR CERTAIN ALLOY STEELS MAKES IT POSSIBLE TO PROVIDE SPECIAL TREATMENT FOR THESE PRODUCTS , UNDER WHICH THE QUOTAS MAY BE EXCEEDED UNDER THE SUPERVISION OF THE COMMISSION .

6 . DELIVERIES ON THE COMMUNITY MARKET

ALTHOUGH ARTICLE 58 PROVIDES SPECIFICALLY ONLY FOR PRODUCTION QUOTAS , ITS BASIC AIM IS TO RESTORE THE BALANCE BETWEEN SUPPLY AND DEMAND ON THE MARKET . THIS AIM WOULD NOT BE ACHIEVED IF , EVEN THOUGH THEY ADHERED TO THE PRODUCTION QUOTAS , CERTAIN UNDERTAKINGS RELEASED RELATIVELY GREATER QUANTITIES ON TO THE COMMON MARKET THAN WAS THE CASE DURING THE PERIOD JULY 1977 TO JUNE 1980 , WHICH SERVED AS THE BASIS FOR CALCULATING THE PRODUCTION QUOTAS . ARTICLE 58 MUST THEREFORE BE INTERPRETED AS CONFERRING POWERS ON THE COMMISSION TO TREAT THE EXCEEDING OF THE RATIO BETWEEN COMMUNITY DELIVERIES AND TOTAL DELIVERIES ON THE SAME BASIS AS THE EXCEEDING OF THE PRODUCTION QUOTAS .

THE UNDERTAKINGS ARE IN A POSITION TO OBTAIN PROOF THAT THEY HAVE EXPORTED THEIR PRODUCTS TO NON-MEMBER COUNTRIES . IF THIS PROOF IS NOT FURNISHED , THE DELIVERIES MUST BE CONSIDERED TO HAVE REMAINED WITHIN THE COMMON MARKET .

7 . TRANSFERS , CARRY-OVERS AND PERMISSIBLE EXCEEDANCES

THE AIM OF THE SYSTEM IS STILL ACHIEVED IF THERE ARE TRANSFERS BETWEEN UNDERTAKINGS OF THE QUOTAS ASSIGNED , OR IF PART OF A QUOTA IS CARRIED OVER TO A PERIOD SUBSEQUENT TO THE ONE TO WHICH IT REFERS , OR IF THE QUOTAS ARE IN CERTAIN CASES EXCEEDED BY A MINIMAL AMOUNT .

8 . INFORMATION REQUIRED TO ENABLE THE COMMISSION TO MONITOR MARKET TRENDS

THE PRODUCTION QUOTA SYSTEM CAN BE JEOPARDIZED BY ANY SIGNIFICANT CHANGE IN THE SPLITTING OF PRODUCTION BETWEEN ORDINARY AND SPECIAL STEELS SUBJECT TO THE COMPULSORY QUOTAS . IN THE CURRENT SITUATION , IT IS NOT NECESSARY TO SET SEPARATE PRODUCTION QUOTAS FOR EACH CATEGORY . TRENDS SHOULD , HOWEVER , BE MONITORED CLOSELY TO ENABLE THE COMMISSION TO ACT . THE UNDERTAKINGS MUST THEREFORE PROVIDE THE NECESSARY INFORMATION .

THE COMMISSION MUST MONITOR TRENDS IN SUPPLIES BY NON-INTEGRATED PROCESSING UNDERTAKINGS AND IN DELIVERIES AND RECEIPTS OF SEMI-FINISHED PRODUCTS FOR RE-ROLLING PRODUCED WITHIN THE COMMUNITY IN ORDER TO BE ABLE , WHERE APPROPRIATE , TO TAKE THE NECESSARY STEPS IF SIGNIFICANT CHANGES IN THE STRUCTURE OF SUCH DELIVERIES EMERGE . GENERALLY SPEAKING , THE COMMISSION WILL ENSURE THAT THE VARIOUS CONSUMER SECTORS ARE SUPPLIED ON A REGULAR BASIS AND WILL ACT IF NECESSARY .

9 . FINES FOR EXCEEDING QUOTAS

IN ORDER TO ENSURE THE EFFECTIVENESS OF THE QUOTA SYSTEM , IT WILL BE NECESSARY FOR ANY EXCESS TO BE FULLY SANCTIONED BY MEANS OF A FINE BASED ON EACH EXCESS TONNE PRODUCED .

IN VIEW OF THE WIDELY DIFFERING PRICES OF ORDINARY AND SPECIAL STEELS AND SO THAT THE FINE CAN MAINTAIN A CERTAIN RELATIONSHIP WITH THE VALUE OF THE EXCESS , THERE SHOULD BE DIFFERENT FINES FOR BOTH CASES . FINALLY , THE LEVEL AND FREQUENCY OF EXCESS DURING THE PERIOD WHEN PRODUCTION QUOTAS APPLY MUST ALSO BE TAKEN INTO ACCOUNT WHEN FINES ARE SET .

IN ORDER TO PLACE THE UNDERTAKINGS LIABLE TO A FINE ON AN EQUAL FOOTING IRRESPECTIVE OF THE ACTUAL DATE OF PAYMENT , THERE SHOULD BE A DELAY SURCHARGE DATING FROM THE PAYMENT DEADLINE .

10 . INFORMATION , CHECKS , FINES

IN ORDER TO ENSURE IMPLEMENTATION OF THE QUOTA SYSTEM , THE COMMISSION MUST RECEIVE REGULAR , RAPID INFORMATION ON PRODUCTION AND DELIVERIES BY THE UNDERTAKINGS .

IT MUST ALSO BE POSSIBLE FOR THE COMMISSION TO CHECK THIS INFORMATION . IN ORDER THAT THESE CHECKS CAN BE CARRIED OUT AS SOON AS THE SYSTEM IS INTRODUCED AND PROCEED RAPIDLY , REGULARLY AND WITHOUT INTERRUPTION , THIS DECISION MUST OBLIGE THE UNDERTAKINGS TO SUBMIT TO THESE CHECKS - THEREBY DISPENSING WITH A HOST OF INDIVIDUAL , IDENTICAL DECISIONS - SUBJECT TO THE SANCTIONS PROVIDED FOR IN ARTICLE 47 OF THE TREATY . IN VIEW OF THE VERY LARGE NUMBER AND FREQUENCY OF THE CHECKS WHICH MUST BE CARRIED OUT TO A VERY TIGHT SCHEDULE , THE COMMISSION MUST BE ABLE TO CALL UPON THIRD PARTIES WHO ARE SUBJECT TO AN OBLIGATION TO MAINTAIN BUSINESS SECRECY .

11 . EXCEPTIONAL DIFFICULTIES

IMPLEMENTATION OF THIS DECISION COULD CAUSE EXCEPTIONAL DIFFICULTIES FOR A NUMBER OF UNDERTAKINGS AS A RESULT OF APPLYING GENERAL RULES WHICH TAKE NO ACCOUNT OF SPECIFIC SITUATIONS . THERE MUST THEREFORE BE A PROCEDURE FOR CORRECTING THIS .

AFTER CONSULTING THE CONSULTATIVE COMMITTEE AND WITH THE ASSENT OF THE COUNCIL ON THE ESTABLISHMENT OF THE PRODUCTION QUOTA SYSTEM , AND ON THE BASIS OF STUDIES MADE JOINTLY WITH THE UNDERTAKINGS AND ASSOCIATIONS OF UNDERTAKINGS ON THE DETERMINATION OF THE QUOTAS ,

HAS ADOPTED THIS DECISION :

ARTICLE 1

1 . A SYSTEM OF QUOTAS FOR THE PRODUCTION OF CRUDE STEEL IS HEREBY ESTABLISHED FOR UNDERTAKINGS IN THE STEEL INDUSTRY .

2 . WITHOUT PREJUDICE TO OBLIGATIONS WITH REGARD TO INFORMATION AND CHECKS PROVIDED FOR IN THIS DECISION , THE FOLLOWING SHALL NOT BE SUBJECT TO THE PRODUCTION QUOTA SYSTEM :

( A ) UNDERTAKINGS WHOSE REFERENCE PRODUCTION AS REFERRED TO IN ARTICLE 4 DOES NOT EXCEED 3 000 TONNES OF CRUDE STEEL OR 3 000 TONNES OF FINISHED ROLLED PRODUCTS ;

( B ) UNDERTAKINGS WHOSE PRODUCTION OF ECSC PRODUCTS IS CONFINED TO LIQUID STEEL FOR CASTINGS .

HOWEVER , IF THE PRODUCTION OF THE UNDERTAKINGS REFERRED TO IN ( A ) ABOVE EXCEEDS THE TONNAGES INDICATED ABOVE FOR A QUARTER DURING WHICH THE QUOTA SYSTEM APPLIES , THESE UNDERTAKINGS SHALL BE SUBJECT TO THE SYSTEM FROM THE FOLLOWING QUARTER ONWARDS .

3 . ANY GROUP OF CONCENTRATED UNDERTAKINGS WITHIN THE MEANING OF ARTICLE 66 OF THE TREATY SHALL RANK AS A SINGLE UNDERTAKING , EVEN IF THESE UNDERTAKINGS ARE LOCATED IN DIFFERENT MEMBER STATES .

4 . THE COMMISSION SHALL MANAGE THE QUOTA SYSTEM . IT MAY OBTAIN ASSISTANCE FROM INDEPENDENT AGENCIES OR FROM EXPERTS . THE BUSINESS SECRECY OF THE UNDERTAKINGS SHALL BE MAINTAINED .

ARTICLE 2

WITHOUT PREJUDICE TO THE PROVISIONS OF ARTICLE 6 ( 1 ), THE COMMISSION SHALL FIX QUARTERLY PRODUCTION QUOTAS FOR CRUDE STEEL AND FOR THE FOLLOWING FOUR GROUPS OF ROLLED PRODUCTS FURTHER DESCRIBED IN ANNEX I :

GROUP I : HOT-ROLLED WIDE AND NARROW STRIP ;

GROUP II : REVERSING MILL PLATE AND WIDE FLATS ;

GROUP III : HEAVY SECTIONS ( SHEET PILING , WIDE FLANGED BEAMS , OTHER BEAMS AND OTHER SECTIONS , PERMANENT WAY MATERIAL );

GROUP IV : LIGHT SECTIONS ( COILED WIRE ROD , CONCRETE REINFORCING BARS AND OTHER MERCHANT BARS ).

THE PRODUCTION QUOTAS SHALL INCLUDE ALL QUALITIES AND ALL CHOICES OF PRODUCT , EXCEPT AS OTHERWISE PROVIDED FOR IN ARTICLE 2 A RELATING TO HIGH-GRADE AND SPECIAL STEELS .

ARTICLE 2 A

THE PROVISIONS BELOW SHALL APPLY TO HIGH-GRADE AND SPECIAL STEELS :

1 . THE FOLLOWING SHALL BE EXEMPT FROM THE COMPULSORY QUOTAS IMPOSED BUT SHALL REMAIN SUBJECT TO MONITORING OF PRODUCTION :

( A ) LIQUID STEELS FOR CASTINGS ;

( B ) UNDERTAKINGS WHOSE REFERENCE PRODUCTION DOES NOT EXCEED 6 000 TONNES .

HOWEVER , IF DURING A QUARTER IN WHICH THE QUOTA SYSTEM IS IN FORCE , THE PRODUCTION OF THOSE UNDERTAKINGS EXCEEDS THE STATED TONNAGE , THEY SHALL BE SUBJECT TO THE SYSTEM FROM THE FOLLOWING QUARTER .

2 . ( A ) ALLOY STEELS WITH AN ALLOY CONTENT OF NOT LESS THAN 5 % ( EXCEPT FOR STEELS CONTAINING LESS THAN 1 % CARBON AND MORE THAN 12 % CHROMIUM ), WHOSE ACTUAL INVOICED PRICE IS NOT LESS THAN 30 % HIGHER THAN THE LIST PRICE OF THE CORRESPONDING ORDINARY STEEL PRODUCT , MAY BE PRODUCED IN EXCESS OF THE COMPULSORY QUOTA FOR THE RELEVANT GROUP OF PRODUCTS FOR A GIVEN UNDERTAKING .

( B ) THE COMMISSION , IN CONSULTATION WITH THE PRODUCERS AND USERS , SHALL CONDUCT A CONTINUING SURVEY OF MARKET TRENDS AND SHALL PUBLISH THE INFORMATION TOGETHER WITH SUITABLE GUIDELINES .

( C ) WHERE AN UNDERTAKING EXCEEDS THE GUIDELINES PUBLISHED BY THE COMMISSION WHILST AVAILING ITSELF OF THE OPTION PERMITTED BY PARAGRAPH ( A ), THE COMMISSION SHALL CURB EXCESS PRODUCTION TO THE EXTENT REQUIRED BY THE MARKET SITUATION .

( D ) HAVING REGARD TO MARKET TRENDS AND THE INFORMATION WHICH IT RECEIVES , THE COMMISSION MAY TERMINATE THE DEROGATION ARRANGEMENTS IN RESPECT OF THE PRODUCT CONCERNED .

ARTICLE 3

1 . THE COMMISSION SHALL FIX QUARTERLY PRODUCTION QUOTAS FOR EACH UNDERTAKING :

- ON THE BASIS OF THE REFERENCE PRODUCTION FIGURES AS REFERRED TO IN ARTICLE 4 OF THAT UNDERTAKING ;

- BY APPLICATION OF ABATEMENT RATES TO THESE REFERENCE PRODUCTION FIGURES AS REFERRED TO IN ARTICLE 5 .

2 . THE COMMISSION SHALL INFORM EACH UNDERTAKING OF ITS REFERENCE PRODUCTION FIGURES OF AND ITS PRODUCTION QUOTAS RESULTING FROM THE APPLICATION OF THE ABATEMENT RATES .

ARTICLE 4

THE QUARTERLY REFERENCE PRODUCTION FIGURES FOR EACH UNDERTAKING SHALL BE CALCULATED AS FOLLOWS :

1 . FOR EACH MONTH OF THE RELEVANT QUARTER , REFERENCE SHALL BE MADE TO THE SAME MONTH DURING THE PERIOD FROM JULY 1977 TO JUNE 1980 DURING WHICH THE TOTAL PRODUCTION OF THE FOUR GROUPS OF ROLLED PRODUCTS WAS THE HIGHEST . THE THREE MONTHS THUS CHOSEN , WHICH WILL NOT NECESSARILY BE CONSECUTIVE , SHALL CONSTITUTE THE REFERENCE PERIOD .

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2 . THE REFERENCE PRODUCTION FIGURES SHALL BE THE SAME , FOR CRUDE STEEL AND FOR EACH OF THE OTHER GROUPS OF ROLLED PRODUCTS , AS THE PRODUCTION OF THE CORRESPONDING ITEMS DURING THE REFERENCE PERIOD .

3 . HOWEVER , IF DURING THE PERIOD FROM JULY 1977 TO JUNE 1980 , THE AVERAGE RATE OF UTILIZATION OF THE PRODUCTION FACILITIES OF AN UNDERTAKING WAS 10 PERCENTAGE POINTS OR MORE BELOW THE AVERAGE RATE OF UTILIZATION OF THE SAME FACILITIES OF THE OTHER UNDERTAKINGS OF THE COMMUNITY , DURING THE YEARS 1977 , 1978 AND 1979 , THE COMMISSION SHALL INCREASE THE REFERENCE PRODUCTION FIGURES FOR THIS UNDERTAKING TO A LEVEL WHICH CORRESPONDS TO A RATE OF UTILIZATION WHICH LIES FIVE PERCENTAGE POINTS BELOW THAT AVERAGE RATE IN THE OTHER UNDERTAKINGS :

- PROVIDED THE UNDERTAKING UNDERTOOK TO COMPLY FROM JULY 1977 TO JUNE 1980 WITH THE DELIVERY PROGRAMMES ESTABLISHED BY THE COMMISSION , AND

- PROVIDED THE PROGRAMME FOR THIS ENTERPRISE WAS FIXED TAKING 1974 AS A BASIS , AND

- PROVIDED THAT DURING THAT YEAR ALL OR PART OF THE UNDERTAKING ' S FACILITIES WERE NOT ON STREAM .

4 . WHERE , FURTHER TO AN INVESTMENT PROGRAMME DULY REPORTED AND NOT THE SUBJECT OF AN UNFAVOURABLE OPINION , THE UNDERTAKING ACTIVATES A NEW PLANT AFTER 1 JULY 1980 , THE COMMISSION SHALL ADAPT APPROPRIATELY THE REFERENCE PRODUCTION OF THIS UNDERTAKING , PROVIDED IT FINDS THAT THE NEW PRODUCTION POSSIBILITY THUS ESTABLISHED BRINGS THE TOTAL PRODUCTION POSSIBILITIES FOR THE FOUR GROUPS OF PRODUCTS TO A LEVEL EXCEEDING BY AT LEAST 15 % THE TOTAL PRODUCTION POSSIBILITIES EXISTING FOR 1979 .

IN THIS CASE , THE REFERENCE PRODUCTION SHALL BE INCREASED BY A QUANTITY DERIVED FROM APPLICATION TO THE NEW PRODUCTION POSSIBILITIES OF A RATE CORRESPONDING TO THE HIGHEST ANNUAL AVERAGE RATE OF UTILIZATION OF THE SAME PLANT IN THE COMMUNITY DURING THE YEARS 1977 , 1978 AND 1979 , LESS FIVE PERCENTAGE POINTS . THE REFERENCE PRODUCTION FOR CRUDE STEEL SHALL BE ADAPTED ACCORDINGLY .

5 . TO TAKE ACCOUNT OF RESTRUCTURING , THE COMMISSION SHALL INCREASE THE REFERENCE PRODUCTION FIGURES :

- WHERE AN UNDERTAKING ' S TOTAL PRODUCTION OF THE FOUR GROUPS OF PRODUCTS DURING A REFERENCE PERIOD FALLS SHORT OF PRODUCTION IN THE SAME QUARTER OF 1974 , AND

- WHERE THIS UNDERTAKING HAS ACHIEVED FOR THE YEAR ENDING IN 1979 A PROFIT WHICH IS SHOWN IN ITS ANNUAL REPORT OR REPORTED TO THE NATIONAL OFFICIAL AGENCY RESPONSIBLE FOR THE FILING OF THE ANNUAL ACCOUNTS OF COMPANIES .

IN THIS CASE , THE COMMISSION SHALL INCREASE THE REFERENCE PRODUCTION FIGURES SO AS TO REACH THE TOTAL EQUIVALENT TO THE PRODUCTION OF THE CORRESPONDING QUARTER OF 1974 .

ARTICLE 5

1 . THE RATE OF ABATEMENT IN RELATION TO THE REFERENCE PRODUCTION FOR THE GROUPS OF ROLLED PRODUCTS FOR THE FOURTH QUARTER OF 1980 SHALL BE AS FOLLOWS :

GROUP I20.78 % GROUP II18.93 % GROUP III21.53 %

GROUP IV17.39 % THE RATES FOR THE FIRST AND SECOND QUARTERS OF 1981 SHALL BE DETERMINED IN DUE TIME BY THE COMMISSION .

2 . THE RATE OF ABATEMENT FOR CRUDE STEEL WHICH THE COMMISSION COMMUNICATES TO UNDERTAKINGS SHALL CORRESPOND TO THE AVERAGE ABATEMENT RATES OF THE FOUR GROUPS OF ROLLED PRODUCTS WEIGHTED ACCORDING TO THE REFERENCE PRODUCTION OF EACH OF THESE GROUPS OF PRODUCTS .

FOR STEEL UNDERTAKINGS WHOSE PRODUCTION OF ECSC PRODUCTS IS CONFINED TO PRODUCTS NOT COVERED BY THE FOUR GROUPS OF ROLLED PRODUCTS OR TO CRUDE STEEL , THE ABATEMENT RATE FOR CRUDE STEEL SHALL CORRESPOND TO THE AVERAGE ABATEMENT RATE FOR ALL STEEL UNDERTAKINGS , AS ESTABLISHED ACCORDING TO THE FIRST SUBPARAGRAPH .

WHERE , BECAUSE OF THE APPLICATION OF THE CRUDE STEEL QUOTA THUS CALCULATED , AN UNDERTAKING IS NO LONGER IN A POSITION TO PRODUCE ROLLED PRODUCTS UP TO ITS PRODUCTION QUOTAS , THE COMMISSION , AT THE REQUEST OF THE UNDERTAKING , WHICH MUST MAKE SUCH REQUEST WITHIN 10 DAYS OF NOTIFICATION OF THE QUOTAS , SHALL , AFTER VERIFICATION , ADAPT THE QUOTA FOR CRUDE STEEL .

ARTICLE 6

WITHOUT PREJUDICE TO THE OBLIGATIONS REGARDING INFORMATION AND CONTROL LAID DOWN IN THIS DECISION , AND SAVE AS OTHERWISE PROVIDED FOR IN PARAGRAPH 1.A :

1 . THE UNDERTAKINGS SHALL BE SUBJECT TO NO PRODUCTION QUOTA WITH REGARD TO THE FOLLOWING PRODUCTS , FURTHER DESCRIBED IN ANNEX I :

( A ) PERMANENT WAY MATERIAL ; AND , IN SO FAR AS SUCH PRODUCTS ARE PROCESSED IN THE COMMUNITY :

( B ) REVERSING MILL PLATE FOR THE PRODUCTION OF WELDED TUBES ;

( C ) HOT-ROLLED WIDE AND NARROW STRIP FOR THE PRODUCTION OF WELDED TUBES ;

( D ) HOT-ROLLED WIDE STRIP FOR THE PRODUCTION OF TINPLATE ;

( E ) INGOTS , ROUNDS AND SQUARES FOR SEAMLESS TUBES .

1.A . AS REGARDS HOT-ROLLED WIDE AND NARROW STRIP FOR THE PRODUCTION OF WELDED TUBES WITH A DIAMETER NOT EXCEEDING 406.4 MM :

( A ) THE COMMISSION SHALL CONDUCT A CONTINUING SURVEY OF MARKET TRENDS IN CONSULTATION WITH THE PRODUCERS AND USERS AND SHALL PUBLISH APPROPRIATE INFORMATION AND GUIDELINES ;

( B ) WHERE AN UNDERTAKING EXCEEDS THE GUIDELINES PUBLISHED BY THE COMMISSION , THE LATTER SHALL LIMIT THE EXCESS TO THE EXTENT REQUIRED BY THE MARKET ;

( C ) HAVING REGARD TO MARKET TRENDS AND THE INFORMATION WHICH IT RECEIVES , THE COMMISSION MAY DISCONTINUE THE DEROGATION ARRANGEMENTS FOR THE PRODUCT CONCERNED .

2 . AS A TRANSITIONAL MEASURE THE QUOTAS FOR GROUPS I , II AND III WHICH THE COMMISSION NOTIFIES FOR THE FOURTH QUARTER OF 1980 SHALL BE ADJUSTED AS FOLLOWS : THE UNDERTAKINGS SHALL EXCLUDE :

- FROM GROUP I THE HOT-ROLLED WIDE AND NARROW STRIP REFERRED TO IN PARAGRAPH 1 ( C ) AND ( D );

- FROM GROUP II THE REVERSING MILL PLATE REFERRED TO IN PARAGRAPH 1 ( B );

- FROM GROUP III THE PERMANENT WAY MATERIAL REFERRED TO IN PARAGRAPH 1 ( A ).

THEY SHALL APPLY THE ABATEMENT RATE FOR THE GROUP TO THE REMAINING QUANTITIES . THEY SHALL NOTIFY THE QUOTAS THUS CALCULATED TO THE COMMISSION WITHIN 10 DAYS OF NOTIFICATION OF THE QUOTAS BY THE COMMISSION .

AS FOR THE CRUDE STEEL QUOTA NOTIFIED BY THE COMMISSION , UNDERTAKINGS MAY EXCEED THIS QUOTA BY AN AMOUNT COMPLYING WITH THE SPECIAL RULES SET OUT IN PARAGRAPH 1 AND ARTICLE 2 A .

3 . FROM THE FIRST QUARTER OF 1981 ONWARDS , THE COMMISSION SHALL FIX QUOTAS FOR GROUPS I , II AND III AND FOR CRUDE STEEL , TAKING ACCOUNT OF THE EXCLUSION OF THE PRODUCTS LISTED IN PARAGRAPH 1 .

ARTICLE 7

1 . ALLOWING FOR TRANSITIONAL CORRECTIONS PROVIDED FOR IN ARTICLE 6 ( 2 ), AND WITHOUT PREJUDICE TO ARTICLE 8 , UNDERTAKINGS MUST COMPLY WITH THE PRODUCTION QUOTAS NOTIFIED TO THEM BY THE COMMISSION .

2 . WITH REGARD TO THE DELIVERY OF PRODUCTS SUBJECT TO THE QUOTA SYSTEM , UNDERTAKINGS MAY NOT EXCEED , BY GROUP OF PRODUCTS , FOR DELIVERIES WITHIN THE COMMON MARKET , THE RATIO OF COMMUNITY DELIVERIES TO TOTAL DELIVERIES IN THOSE 12 MONTHS OF THE PERIOD FROM JULY 1977 TO JUNE 1980 IN WHICH THE TOTAL PRODUCTION OF THE FOUR GROUPS OF ROLLED PRODUCTS WAS THE HIGHEST .

3 . UNDERTAKINGS WHOSE PRODUCTION OF STEEL PRODUCTS FALLS WITHIN A SINGLE GROUP OR WHOSE PRODUCTION IS COVERED BY NONE OF THE FOUR GROUPS SHALL BENEFIT FROM AN EXCESS TOLERANCE OF 3 % FOR THEIR DELIVERIES WITHIN THE COMMON MARKET .

ARTICLE 8

1 . AN EXCESS TOLERANCE OF 3 % SHALL BE ACCORDED FOR EACH QUOTA , PROVIDED THAT TOTAL PRODUCTION MAY NOT EXCEED THE SUM OF THE QUOTAS FOR THE FOUR GROUPS OF PRODUCTS .

2 . UNDERTAKINGS WHICH HAVE NOT EXHAUSTED THEIR QUOTAS MAY CARRY OVER TO THE FOLLOWING QUARTER UP TO 50 % OF THE UNUSED PART OF THE QUOTA .

SUCH A CARRY-OVER MUST BE EFFECTED WITHIN THE SAME PRODUCT GROUP AND , WITH REGARD TO DELIVERIES , IN COMPLIANCE WITH ARTICLE 7 ( 2 ).

3 . UNDERTAKINGS MAY , AFTER PREVIOUS NOTIFICATION TO THE COMMISSION , EXCHANGE WITH OR SELL TO OTHER UNDERTAKINGS QUOTAS OR PARTS OF QUOTAS REFERRING TO THE CURRENT QUARTER .

4 . DELIVERIES IN RESPECT OF WHICH AN UNDERTAKING CANNOT SHOW PROOF OF EXPORT OUTSIDE THE TERRITORY OF THE COMMUNITY SHALL BE DEEMED TO HAVE BEEN MADE WITHIN THE COMMON MARKET .

DOCUMENTS ACCEPTABLE AS EVIDENCE OF EXPORT SHALL INCLUDE THE FOLLOWING :

( A ) A COPY STAMPED BY THE EXPORT CUSTOMS OFFICE OF THE COMMUNITY SHIPMENT DECLARATION FORM EX PROVIDED FOR IN COUNCIL REGULATION ( EEC ) NO 2102/77 ( 1 );

( B ) COMMERCIAL DOCUMENTS RELATING TO THE SHIPMENT INSTRUCTIONS FOR THE RELEVANT PRODUCTS AND THE FREIGHTING OF THESE , INCLUDING COPIES OF THE ORDERS FOR LOADING ON BOARD SHIP , MARITIME BILLS OF LADING , INLAND WATERWAY FREIGHTING CONTRACTS , CARRIAGE LETTERS FOR TRANSPORT BY RAIL OR BY ROAD .

ARTICLE 9

FIRMS EXCEEDING THEIR PRODUCTION QUOTA OR THAT PART OF THIS QUOTA WHICH , UNDER ARTICLE 7 ( 2 ) AND ( 3 ), MAY BE DELIVERED WITHIN THE COMMON MARKET , SHALL BE FINED . THIS FINE SHALL GENERALLY BE 75 ECU PER TONNE OF EXCESS FOR ORDINARY STEELS AND 150 ECU PER TONNE OF EXCESS FOR SPECIAL STEELS .

WHERE THE PRODUCTION OF AN UNDERTAKING EXCEEDS THE QUOTA BY 10 % OR MORE OR WHERE THE UNDERTAKING HAS ALREADY EXCEEDED DURING ONE OF THE PREVIOUS QUARTERS ITS QUOTA OR QUOTAS , THE FINES MAY BE UP TO DOUBLE THESE AMOUNTS PER TONNE . THE SAME RULES SHALL APPLY WITH REGARD TO DELIVERIES EXCEEDING THE QUANTITIES WHICH MAY BE DELIVERED IN THE COMMON MARKET .

THIS AMOUNT SHALL BE INCREASED BY 1 % FOR EACH MONTH OF DELAY OF PAYMENT , FROM THE DATE FIXED IN THE PENALIZATION DECISION . A MONTH STARTED SHALL COUNT AS A WHOLE MONTH .

ARTICLE 10

1 . FROM OCTOBER 1980 ONWARDS UNDERTAKINGS SHALL REPORT EACH MONTH TO THE COMMISSION THEIR PRODUCTION , BY PLANT , OF CRUDE STEEL AND ROLLED PRODUCTS IN THE FOUR GROUPS REFERRED TO IN ARTICLE 2 . THESE REPORTS MUST REACH THE COMMISSION NOT LATER THAN THREE WORKING DAYS AFTER THE END OF THE RELEVANT MONTH .

UNDERTAKINGS SHALL ALSO REPORT TO THE COMMISSION THEIR WEEKLY AND DAILY PRODUCTION , BY PLANT , OF CRUDE STEEL AND OF ROLLED PRODUCTS IN THE FOUR GROUPS REFERRED TO ABOVE . THESE REPORTS MUST REACH THE COMMISSION WITHIN TWO WORKING DAYS AFTER THE END OF THE RELEVANT WEEK AND ON THE FIRST WORKING DAY AFTER THE END OF THE RELEVANT DAY .

THE MONTHLY , WEEKLY AND DAILY REPORTS MUST BE DRAWN UP IN ACCORDANCE WITH THE FORM REPRODUCED IN ANNEX II .

2 . DECISION NO 2613/80/ECSC IS HEREBY REPEALED .

ARTICLE 11

1 . BY 20 NOVEMBER 1980 , ALL UNDERTAKINGS SHALL REPORT TO THE COMMISSION FOR EACH MONTH IN THE PERIOD JULY 1977 TO JUNE 1980 :

- THE SUBDIVISION OF THEIR DELIVERIES BETWEEN DELIVERIES IN THE COMMON MARKET AND EXPORTS TO NON-MEMBER COUNTRIES ;

- THE SUBDIVISION OF THEIR PRODUCTION BETWEEN ORDINARY STEEL PRODUCTS AND SPECIAL STEEL PRODUCTS ;

- THE PRODUCTION OF STEEL PRODUCTS INDICATED IN ARTICLE 6 ( 1 ) AND ( 1.A ) INTENDED FOR THE PRODUCTION WITHIN THE COMMON MARKET OF TUBES AND OF TIN-PLATE AND THEIR EQUIVALENT IN CRUDE STEEL , STEEL SEMI-FINISHED PRODUCTS AND FINISHED PRODUCTS .

2 . FROM OCTOBER 1980 ONWARDS UNDERTAKINGS MUST SEND THE SAME STATISTICS EACH MONTH TO THE COMMISSION . THE PRODUCTION REPORTS MUST REACH THE COMMISSION WITHIN SIX WORKING DAYS OF THE END OF THE RELEVANT MONTH AND THE DELIVERIES REPORTS WITHIN 12 WORKING DAYS OF THE END OF THE RELEVANT MONTH . THE FIRST REPORTS MUST REACH THE COMMISSION WITHIN 10 WORKING DAYS OF THE ENTRY INTO FORCE OF THIS DECISION .

3 . THE REPORTS REFERRED TO IN PARAGRAPHS 1 AND 2 MUST BE DRAWN UP IN ACCORDANCE WITH THE FORMS REPRODUCED IN ANNEXES III , IV AND V .

ARTICLE 12

1 . UNDERTAKINGS SHALL INFORM THE COMMISSION AT ITS REQUEST OF THEIR DELIVERIES TO NON-INTEGRATED STEEL PROCESSING UNDERTAKINGS DURING THE REFERENCE PERIOD AND DURING THE PERIOD OF APPLICATION OF THIS DECISION .

2 . AT THE REQUEST OF THE COMMISSION , THE SAME INFORMATION MUST BE PROVIDED WITH REGARD TO DELIVERIES AND RECEIPTS OF SEMI-FINISHED PRODUCTS FOR RE-ROLLING PRODUCED BY COMMUNITY UNDERTAKINGS .

3 . IF THE COMMISSION TAKES THE VIEW THAT THE DEVELOPMENTS REFLECTED IN THE REPORTS AND IN THE INFORMATION REFERRED TO IN ARTICLE 11 ( 1 ), SECOND INDENT , AND IN PARAGRAPHS ( 1 ) AND ( 2 ) OF THIS ARTICLE ARE LIABLE TO ENDANGER ACHIEVEMENT OF THE OBJECTIVES AIMED AT BY THE PRODUCTION QUOTAS SYSTEM , IT SHALL TAKE APPROPRIATE MEASURES TO REMEDY THIS SITUATION .

THE SAME RULE SHALL APPLY IF THE DISTRIBUTION OF DELIVERIES WITHIN THE COMMON MARKET DOES NOT MATCH TO THE EXTENT NECESSARY THE DEVELOPMENT OF THE CURRENT BUSINESS SITUATION IN THE VARIOUS STEEL USING INDUSTRIES .

ARTICLE 13

1 . THE COMMISSION SHALL VERIFY THE ACCURACY OF THE REPORTS AND INFORMATION PROVIDED BY UNDERTAKINGS . UNDERTAKINGS MUST ALLOW SUCH VERIFICATION WORK , AND NO INDIVIDUAL DECISION SHALL BE REQUIRED FOR THIS PURPOSE . THE INSTRUCTION GIVEN TO THE VERIFYING OFFICIAL MUST REFER TO THIS PROVISION AND STATE WHAT REPORTS OR INFORMATION PROVIDED BY THE UNDERTAKING HE HAS BEEN ASKED TO VERIFY .

2 . ANY UNDERTAKINGS EVADING THE OBLIGATIONS INCUMBENT UPON THEM UNDER ARTICLES 10 , 11 , 12 AND 13 ( 1 ) OR GIVING FALSE INFORMATION SHALL BE LIABLE TO THE FINES AND PENALTIES PROVIDED FOR IN ARTICLE 47 OF THE TREATY .

ARTICLE 14

WHERE THE PRODUCTION OR DELIVERY RESTRICTIONS IMPOSED BY THIS DECISION OR ITS IMPLEMENTING MEASURES ENTAIL EXCEPTIONAL DIFFICULTIES FOR AN UNDERTAKING , IT MAY REFER THE MATTER TO THE COMMISSION , PROVIDING ALL APPROPRIATE SUPPORTING DOCUMENTATION .

THE COMMISSION SHALL EXAMINE THE CASE WITHOUT DELAY , IN THE LIGHT OF THE OBJECTIVES OF THIS DECISION .

WHERE APPROPRIATE , THE COMMISSION SHALL ADAPT THE PROVISIONS OF THIS DECISION .

ARTICLE 15

1 . WITHOUT PREJUDICE TO THE APPLICATION OF ARTICLE 58 ( 3 ) OF THE TREATY , THE PRODUCTION QUOTA SYSTEM SHALL APPLY IN RESPECT OF THE FOURTH QUARTER OF 1980 AND OF THE FIRST TWO QUARTERS OF 1981 . IT SHALL THEREFORE END ON 30 JUNE 1981 .

2 . THIS DECISION SHALL ENTER INTO FORCE ON THE DATE OF ITS PUBLICATION IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES .

THIS DECISION SHALL BE BINDING IN ITS ENTIRETY AND DIRECTLY APPLICABLE IN ALL MEMBER STATES .

DONE AT BRUSSELS , 31 OCTOBER 1980 .

FOR THE COMMISSION

ETIENNE DAVIGNON

MEMBER OF THE COMMISSION