Judgment of the Court of 13 July 1962. - Mannesmann AG v High Authority of the European Coal and Steel Community. - Case 19/61.



European Court reports

French edition Page 00675

Dutch edition Page 00705

German edition Page 00719

Italian edition Page 00655

English special edition Page 00357

Danish special edition Page 00333

Greek special edition Page 00791

Portuguese special edition Page 00135



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

++++

1 . COMMON FINANCIAL ARRANGEMENTS - ESTABLISHMENT AND FUNCTIONING - GUIDING PRINCIPLES

( ECSC TREATY, ARTICLE 53 )

2 . COMMON FINANCIAL ARRANGEMENTS - CRITERIA FOR APPLICATION TO THE ECONOMY

( ECSC TREATY, ARTICLE 53 )

3 . COMMON FINANCIAL ARRANGEMENTS - UNDERTAKING - CONCEPT

( ECSC TREATY, ARTICLE 80 )

4 . UNDERTAKINGS - UNITY OF ECONOMIC ACTIVITY - SEPARATE LEGAL PERSONALITY - GROUPS OF UNDERTAKINGS - PARENT COMPANY AND SUBSIDIARIES - ABSENCE OF LEGAL UNITY

( ECSC TREATY, ARTICLE 80 )

5 . COMMON FINANCIAL ARRANGEMENTS - EQUALIZATION OF FERROUS SCRAP - LEVY - PURCHASE OF SCRAP - BROAD INTERPRETATION OF THIS CRITERION - INEFFECTIVENESS OF RESERVATION CLAUSES

( ECSC TREATY, ARTICLE 53 )

6 . DISCRIMINATION - CONCEPT

( ECSC TREATY, ARTICLES 3 ( B ), 4 ( B ))

Summary

CF . SUMMARY OF THE JUDGMENT IN JOINED CASES 17 AND 20/61, N . 1 .

IN WORKING OUT THE FINANCIAL ARRANGEMENTS WHICH IT ESTABLISHES FOR SAFE-GUARDING THE STABILITY OF THE MARKET, THE HIGH AUTHORITY HAS A DUTY TO TAKE ACCOUNT OF THE ECONOMIC CIRCUMSTANCES IN WHICH THOSE ARRANGEMENTS HAVE TO BE APPLIED, SO THAT THE AIMS PURSUED MAY BE ATTAINED UNDER THE MOST FAVOURABLE CONDITIONS AND WITH THE SMALLEST POSSIBLE SACRIFICES BY THE UNDERTAKINGS AFFECTED . THIS PRINCIPLE OF JUSTICE HOWEVER MUST ALWAYS BE HARMONIZED WITH THE PRINCIPLE OF LEGAL CERTAINTY . THESE TWO PRINCIPLES MUST BE SO RECONCILED AS TO ENTAIL THE MINIMUM OF SACRIFICE BY PERSONS AS A WHOLE WITHIN THE COMMUNITY .

*/ EN.661J0017 /*.

2 . CF . SUMMARY OF THE JUDGMENT IN JOINED CASES 17 AND 20/61, N . 2 .

BY REASON OF THE VARIED AND CHANGING NATURE OF ECONOMIC LIFE, CLEAR AND OBJECTIVE CRITERIA OF GENERAL APPLICATION AND PRESENTING CERTAIN COMMON CHARACTERISTICS, MUST BE USED IN THE ESTABLISHMENT AND FUNCTIONING OF THE FINANCIAL ARRANGEMENTS FOR SAFE - GUARDING THE STABILITY OF THE COMMON MARKET . TO THIS END IT IS IMPOSSIBLE TO TAKE ACCOUNT OF EVERY DIFFERENCE WHICH MAY EXIST IN THE ORGANIZATION OF ECONOMIC UNITS SUBJECT TO THE ACTION OF THE HIGH AUTHORITY FOR FEAR OF FETTERING THAT ACTION AND RENDERING IT INEFFECTIVE .

*/ EN.661J0017 /*.

3 . CF . SUMMARY OF THE JUDGMENT IN JOINED CASES

17 AND 20/61, N . 3 .

AN UNDERTAKING IS CONSTITUTED BY A SINGLE ORGANIZATION OF PERSONAL TANGIBLE AND INTANGIBLE ELEMENTS, UNITED IN AN AUTONOMOUS LEGAL ENTITY PURSUING A GIVEN LONG-TERM ECONOMIC AIM .

*/ EN.661J0017 /*.

4 . CF . SUMMARY OF THE JUDGMENT IN JOINED CASES 17 AND 20/61, N . 4 .

THE CREATION OF EVERY LEGAL ENTITY IN THE FIELD OF ECONOMIC ORGANIZATION INVOLVES THE ESTABLISHMENT OF A SEPARATE UNDERTAKING; A PARTICULAR ECONOMIC ACTIVITY CANNOT BE CONSIDERED AS FORMING A SINGLE UNIT IN LAW WHEN THE LEGAL EFFECTS OF THAT ACTIVITY MUST BE SEPARATELY ATTRIBUTED TO SEVERAL DISTINCT LEGAL ENTITIES . THIS PRINCIPLE ALSO APPLIES IN THE CASE OF A GROUP OF UNDERTAKINGS CONTROLLED BY A PARENT COMPANY AND HAVING A CLOSELY INTEGRATED PRODUCTION CYCLE IN WHICH ACCOUNT IS TAKEN OF THE OUTPUT OF THE GROUP AS A WHOLE AND NOT THAT OF THE INDIVIDUAL SUBSIDIARIES, FOR IT MUST BE RECOGNIZED IN LAW THAT THE ACTIVITY OF THE GROUP TAKES PLACE BETWEEN LEGAL PERSONS WHO IN LAW ARE PARTIES TO THE ECONOMIC EXCHANGES .

*/ EN.661J0017 /*.

5 . CF . SUMMARY OF THE JUDGMENT IN JOINED CASES 17 AND 20/61, N . 5 .

PURCHASE AS A CRITERION FOR THE LEVY WITHIN THE FRAMEWORK OF THE EQUALIZATION SCHEME FOR SCRAP MUST BE INTERPRETED IN A BROAD SENSE . IN FACT PURCHASE MUST BE IDENTIFIED WITH EVERY TRANSFER WHICH TAKES PLACE WHEN THE UNDERTAKING CONSUMING THE SCRAP RECEIVES IT FROM AN OUTSIDE SOURCE IN RETURN FOR THE FIXING OF A PRICE . THE FACT OF THIS TRANSFER CANNOT BE AVOIDED BY A CLAUSE RETAINING OWNERSHIP FOR THE PURPOSE OF SCRAP TO BE SUBSEQUENTLY RECOVERED .

*/ EN.661J0017 /*.

6 . CF . SUMMARY OF THE JUDGMENT IN JOINED CASES 17 AND 20/61, N . 6 .

FOR THE HIGH AUTHORITY TO BE ACCUSED OF DISCRIMINATION, IT MUST BE SHOWN TO HAVE TREATED LIKE CASES DIFFERENTLY, THEREBY SUBJECTING SOME TO DISADVANTAGES AS OPPOSED TO OTHERS WITHOUT SUCH DIFFERENTIATION BEING JUSTIFIED BY THE EXISTENCE OF SUBSTANTIAL OBJECTIVE DIFFERENCES .

*/ EN.661J0017 /*.

Parties

IN CASE 19/61

MANNESMANN AKTIENGESELLSCHAFT, HAVING ITS REGISTERED OFFICE AT DUSSELDORF, REPRESENTED BY ITS BOARD OF DIRECTORS, ASSISTED BY WERNER VON SIMSON, ADVOCATE OF THE DUSSELDORF BAR, RESIDENT AT BERTRANGE-LUXEMBOURG, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT HIS CHAMBERS, AND BY PROFESSOR GEORGES VAN HECKE, ADVOCATE OF THE BRUSSELS COUR D'APPEL, APPLICANT,

V

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, REPRESENTED BY ITS LEGAL ADVISER, BASTIAAN VAN DER ESCH, ACTING AS AGENT, ASSISTED BY WOLFGANG SCHNEIDER, ADVOCATE OF THE FRANKFURT BAR, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT ITS OFFICES, 2 PLACE DE METZ, DEFENDANT,

SUPPORTED BY

PHOENIX-RHEINROHR AKTIENGESELLSCHAFT, HAVING ITS REGISTERED OFFICE IN DUSSELDORF, REPRESENTED BY E . W . MOMMSEN, IRONWORKS MANAGER, ASSESSOR, AND W . BRUNS, DIRECTOR, ASSISTED BY H . LIETZMANN, ADVOCATE OF THE ESSEN BAR, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF ALBERT WOOPEN, 2 RUE DU FORT-ELISABETH, INTERVENER,

Subject of the case

APPLICATION FOR ANNULMENT OF THE DECISION OF THE HIGH AUTHORITY OF 5 JULY 1961 NOTIFIED TO THE APPLICANT ON 24 JULY 1961, REJECTING A CLAIM FOR EXEMPTION FROM THE EQUALIZATION CONTRIBUTION,

Grounds

P . 370

ADMISSIBILITY

THE ADMISSIBILITY OF THE APPLICATION HAS NOT BEEN FORMALLY CONTESTED AND THE COURT HAS NO CRITICISM TO RAISE OF ITS OWN MOTION . THE APPLICATION IS THEREFORE ADMISSIBLE .

ON THE SUBSTANCE OF THE CASE

I - SUBMISSION BASED ON INFRINGEMENT OF THE TREATY OR OF THE RULES OF LAW RELATING TO ITS APPLICATION

1 . THE CONCEPTS OF 'UNDERTAKING' AND 'PURCHASE' FOR THE PURPOSES OF THE APPLICATION OF THE EQUALIZATION SCHEME FOR SCRAP

THE APPLICANT MAINTAINS THAT SCRAP MOVING BETWEEN ITS SUBSIDIARIES IS OWN RESOURCES, WITHIN THE MEANING OF THE BASIC DECISIONS, OF ONE AND THE SAME UNDERTAKING CONSTITUTED BY THE PARENT COMPANY WHICH ENGAGED IN PRODUCTION THROUGH THE INTERMEDIARY OF ITS SUBSIDIARIES, BEING STRIPPED OF THE ESSENTIAL CHARACTERISTICS OF AN UNDERTAKING .

IN SUPPORT OF ITS ARGUMENT, THE APPLICANT EMPHASIZES THE VERY WIDE POWERS ENJOYED BY THE PARENT COMPANY IN RELATION TO ITS SUBSIDIARIES WHICH ARE STRIPPED OF ALL AUTONOMY . THE NATIONAL LAW OF MEMBER STATES IN CERTAIN CIRCUMSTANCES TREATS GROUPS CONSTITUTED BY THE PARENT COMPANY AND ITS SUBSIDIARIES AS ANALOGOUS TO UNDERTAKINGS; THIS IS ESPECIALLY SO IN THE CASE OF GERMAN FISCAL LAW . IN THE PRESENT CASE MOREOVER THERE WERE CONTRACTS WHEREBY THE PROFITS AND LOSSES OR THE ACTIVITIES OF THE SUBSIDIARIES WERE TAKEN OVER IN TOTO BY THE PARENT COMPANY .

ON THIS POINT THE APPLICANT INVOKES CERTAIN PASSAGES, TAKEN OUT OF CONTEXT, FROM THE JUDGMENTS OF THE COURT IN JOINED CASES 32 AND 33/58 ( REC . 1958-1959, PP . 300 ET SEQ .) CASE 42/58 ( REC . 1958-1959, PP.399 ET SEQ .) AND JOINED CASES 42 AND 49/59 ( REC . 1961, PP . 141 ET SEQ .) AND MAINTAINS THAT THE ILLEGALITY OF THE EXEMPTION OF GROUP SCRAP LAID DOWN BY THOSE JUDGMENTS DOES NOT APPLY TO IT BECAUSE THEY REFERRED TO 'KONZERNE' ( CONCERNS ) WHICH WERE NOT COMPLETELY INTEGRATED .

IT MUST FIRST BE OBSERVED THAT THE HIGH AUTHORITY, IN WORKING OUT AND APPLYING THE FINANCIAL ARRANGEMENTS WHICH IT HAS ESTABLISHED TO SAFEGUARD THE STABILITY OF THE MARKET, HAS INDEED A DUTY TO TAKE ACCOUNT OF THE ACTUAL ECONOMIC CIRCUMSTANCES IN WHICH THESE ARRANGEMENTS HAVE TO BE APPLIED, SO THAT THE AIMS PURSUED MAY BE ATTAINED UNDER THE MOST FAVOURABLE CONDITIONS AND WITH THE SMALLEST POSSIBLE SACRIFICES BY THE UNDERTAKINGS AFFECTED . THIS PRINCIPLE OF JUSTICE HOWEVER MUST ALWAYS BE HARMONIZED WITH THE PRINCIPLE OF LEGAL CERTAINTY WHICH LIKEWISE IS BASED ON THE REQUIREMENTS OF JUSTICE AND ECONOMY .

P . 371

THESE TWO PRINCIPLES MUST BE SO RECONCILED AS TO ENTAIL THE MINIMUM OF SACRIFICE BY COMMUNITY MEMBERS AS A WHOLE .

BY REASON OF THE VARIED AND CHANGING NATURE OF ECONOMIC LIFE, CLEAR AND OBJECTIVE CRITERIA OF GENERAL APPLICATION AND PRESENTING CERTAIN COMMON FUNDAMENTAL CHARACTERISTICS MUST BE USED IN THE ESTABLISHMENT AND FUNCTIONING OF THE FINANCIAL ARRANGEMENTS FOR SAFEGUARDING THE STABILITY OF THE COMMON MARKET . IT IS THUS IMPOSSIBLE TO TAKE ACCOUNT OF EVERY DIFFERENCE THAT MAY EXIST IN THE ORGANIZATION OF ECONOMIC UNITS SUBJECT TO THE ACTION OF THE HIGH AUTHORITY FOR FEAR OF FETTERING THAT ACTION AND RENDERING IT INEFFECTIVE .

TO DEFINE SCRAP SUBJECT TO THE EQUALIZATION LEVY THE HIGH AUTHORITY, IN ITS DECISIONS N.S 22/54 ET SEQ ., TOOK AS ITS CRITERION THE PURCHASE OF THE SCRAP BY THE UNDERTAKING CONSUMING IT .

AS THE COURT RECOGNIZED IN ITS JUDGMENT IN JOINED CASES 42 AND 49/59 ( REC . 1961, P . 155 ), THIS CRITERION MUST BE BROADLY INTERPRETED . PURCHASE NEED NOT NECESSARILY FULFIL ALL THE CONDITIONS REQUIRED BY THE APPROPRIATE NATIONAL CIVIL LAW FOR THE VALIDITY AND EFFECTIVENESS OF A CONTRACT OF SALE BUT MUST RATHER BE APPLIED TO EVERY TRANSFER EFFECTED BY THE UNDERTAKING CONSUMING IT WHEN THAT UNDERTAKING RECEIVES SCRAP FROM AN OUTSIDE SOURCE AT A PRICE TO BE FIXED .

TO DEFINE THE SCOPE OF THIS CRITERION THE CONCEPT OF AN UNDERTAKING MUST BE STUDIED MORE CLOSELY .

AN UNDERTAKING IS CONSTITUTED BY A SINGLE ORGANIZATION OF PERSONAL, TANGIBLE AND INTANGIBLE ELEMENTS, ATTACHED TO AN AUTONOMOUS LEGAL ENTITY AND PURSUING A GIVEN LONG TERM ECONOMIC AIM .

ACCORDING TO THIS CONCEPT THE CREATION OF EVERY LEGAL ENTITY IN THE FIELD OF ECONOMIC ORGANIZATION INVOLVES THE ESTABLISHMENT OF A SEPARATE UNDERTAKING; A PARTICULAR ECONOMIC ACTIVITY CANNOT BE REGARDED AS FORMING A SINGLE UNIT IN LAW WHEN THE LEGAL EFFECTS OF THAT ACTIVITY MUST BE SEPARATELY ATTRIBUTED TO SEVERAL DISTINCT LEGAL ENTITIES .

P . 372

IT FOLLOWS FROM THE VERY FACT OF THE CREATION OF A DISTINCT LEGAL PERSON THAT THE LAW RECOGNIZES IN THAT PERSON A FORMAL AUTONOMY AND RESPONSIBILITY OF ITS OWN, SO THAT THE GRANTING OF LEGAL PERSONALITY TO THE DIFFERENT SUBSIDIARIES HAD AS ITS OBJECT AND EFFECT IN LAW THE GRANTING TO EACH OF THEM OF CONTROL OVER ITS ACTIVITIES AND RESPONSIBILITY FOR THE RISKS INVOLVED THEREIN .

SUCH A CHANGE IN THE LEGAL POSITION ARISES SOLELY FROM GRANTING A LEGAL PERSONALITY, WITHOUT REGARD TO THE PERMANENCE OF THE ECONOMIC SITUATION EXISTING BEFORE THE CHANGE .

IN THIS LIGHT IT CANNOT BE DENIED THAT THE CONDITIONS FOR THE EXISTENCE OF A LEGALLY AUTONOMOUS UNDERTAKING ARE ALSO FULFILLED IN THE CASE OF A LEGAL PERSON WHOSE INTERESTS ARE CLOSELY BOUND UP WITH THOSE OF OTHER SUCH PERSONS WHOSE PURPOSES ARE DETERMINED BY DIRECTIVES FROM OUTSIDE .

IT FOLLOWS THAT EVEN IN THE CASE OF A GROUP OF UNDERTAKINGS CONTROLLED BY A PARENT COMPANY AND HAVING A CLOSELY INTEGRATED PRODUCTION CYCLE IN WHICH THE OUTPUT OF THE GROUP AS A WHOLE AND NOT THAT OF THE INDIVIDUAL SUBSIDIARIES IS TAKEN INTO ACCOUNT IT MUST BE RECOGNIZED IN LAW THAT THE ACTIVITY OF THE GROUP TAKES PLACE BETWEEN LEGAL PERSONS WHO IN LAW ARE PARTIES TO ECONOMIC EXCHANGES .

IN THESE CIRCUMSTANCES THE ALLEGATIONS OF THE APPLICANT WHICH SEEK TO SHOW THAT DIFFERENCES EXIST BETWEEN ITS GROUP AND OTHER SORTS OF 'KONZERNE' ARE OF NO AVAIL .

THE ABOVE-MENTIONED CONCEPT OF AN UNDERTAKING, AS APPLIED HERE FOR THE PURPOSES OF THE EQUALIZATION SCHEME, CONSTITUTES A LEGALLY JUSTIFIED CRITERION WHICH SHOULD SERVE TO DETERMINE THE LEGAL PERSONS UPON WHOM CHARGES UNDER PUBLIC LAW FALL .

IT FOLLOWS THAT, IN ORDER TO DETERMINE THE MOVEMENTS OF SCRAP SUBJECT TO EQUALIZATION, IT IS NOT THE GROUP AS A WHOLE WHICH MUST BE LOOKED AT BUT EACH OF THE SEVERAL LEGAL PERSONS INDIVIDUALLY CONSTITUTING THE UNDERTAKINGS .

THIS CONCLUSION DOES NOT RUN COUNTER TO THE FACT THAT GERMAN FISCAL LAW HAS ADOPTED DIFFERENT CRITERIA .

THE EXPLANATION FOR THIS DIFFERENCE IS THAT THE SOLE PURPOSE OF FISCAL LAW IS TO BRING IN REVENUE TO THE STATE BUDGET BY TAXING THE INCREASED WEALTH PRESUMED TO ARISE FROM THE MOVEMENT OF GOODS, WHILST THE EQUALIZATION SCHEME IS INTENDED TO MAINTAIN STABILITY IN THE SCRAP MARKET AND TO THIS END IT IMPOSES A LEVY DIRECTLY ON EVERY MOVEMENT OF SCRAP BETWEEN DIFFERENT UNDERTAKINGS EVEN WHEN FROM THE ECONOMIC STANDPOINT SUCH MOVEMENT DOES NOT CONSTITUTE A TRUE TRANSFER OF WEALTH .

P . 373

IN THE CIRCUMSTANCES THE APPLICANT'S PLEAS CONCERNING THE CONCEPT OF AN UNDERTAKING MUST BE REJECTED .

2 . THE CONCEPT OF AN UNDERTAKING AND THE ATTITUDE OF THE HIGH AUTHORITY

THE APPLICANT GOES ON TO REFER TO THE PAST ATTITUDE OF THE HIGH AUTHORITY WHICH LED IT TO BELIEVE THAT THE HIGH AUTHORITY SHARED ITS IDEA OF THE CONCEPT OF AN UNDERTAKING . IT OBSERVES MOREOVER THAT THE HIGH AUTHORITY ADOPTED THE SAME ATTITUDE TOWARDS IT AND MAINTAINS THAT, EVEN IF THE COURT WERE TO BE UNABLE TO ACCEPT ITS ARGUMENT, THE HIGH AUTHORITY CANNOT BE ALLOWED TO GO BACK ON ITS OWN ACTION (' VENIRE CONTRA FACTUM PROPRIUM ').

IT MUST BE STATED THAT THE ATTITUDE TO WHICH THE APPLICANT REFERS RELATED TO MATTERS SUCH AS DECLARATIONS CONCERNING INVESTMENTS OR THE GENERAL LEVY, AUTHORIZATION TO OPERATE A CONCENTRATION AND THE GRANTING OF LOANS, NONE OF WHICH HAD ANYTHING TO DO WITH THE FUNCTIONING OF THE EQUALIZATION SCHEME FOR SCRAP . THEREFORE, QUITE APART FROM THE QUESTION WHETHER THE ATTITUDE OF THE HIGH AUTHORITY MIGHT HAVE GIVEN GROUNDS FOR THINKING THAT IN OTHER RESPECTS IT CONSIDERED THE PARENT COMPANY AS AN UNDERTAKING FOR THE PURPOSES OF ARTICLE 80 OF THE ECSC TREATY, THE APPLICANT WAS NOT JUSTIFIED IN INTERPRETING THESE BASIC DECISIONS IN THE LIGHT OF THE ATTITUDE OF THE HIGH AUTHORITY ON MATTERS OUTSIDE THE APPLICATION OF THE EQUALIZATION SCHEME .

MOREOVER THE ADMINISTRATIVE AUTHORITY IS NOT ALWAYS BOUND BY ITS PREVIOUS ACTIONS IN ITS PUBLIC ACTIVITIES BY VIRTUE OF A RULE WHICH, IN RELATIONS BETWEEN THE SAME PARTIES, FORBIDS THEM TO VENIRE CONTRA FACTUM PROPRIUM .

IN THESE CIRCUMSTANCES THIS PLEA OF THE APPLICANT MUST BE REJECTED .

3 . ON THE QUESTION WHETHER THE DISPUTED SCRAP CAN BE CONSIDERED AS 'BOUGHT SCRAP'

THE APPLICANT MAINTAINS THAT THE DISPUTED SCRAP CANNOT BE REGARDED AS BOUGHT FERROUS SCRAP IN SO FAR AS THE POSSIBILITY OF PURCHASE WITH REGARD TO QUANTITIES OF SCRAP USED SINCE 23 DECEMBER 1957 HAS BEEN PRECLUDED BY THE RETENTION OF OWNERSHIP BY MANNESMANN HUTTENWEKE AG .

IT MUST BE SAID AT THE OUTSET THAT, AT THE TIME OF TRANSFER OF SCRAP FROM ONE SUBSIDIARY TO ANOTHER, A PRICE WAS ALWAYS FIXED, EVEN AFTER 23 DECEMBER 1957 . IF IT WERE TO BE ADMITTED, AS IS CLAIMED BY THE APPLICANT, THAT THE ISSUE WAS ONE OF BOOK PRICES FIXED INDEPENDENTLY OF THE MARKET, THE VERY FACT THAT EACH SUBSIDIARY FIXES A BOOK FIGURE FOR ITS TRANSFERS OF SCRAP TO OTHER SUBSIDIARIES INDICATES THAT THERE IS A TRANSFER OF OWNERSHIP .

P . 374

FURTHER THERE IS NO NEED TO CONSIDER WHETHER UNDER THE RELEVANT CIVIL LAW, MOVEMENTS OF THE DISPUTED SCRAP BETWEEN THE APPLICANT'S SUBSIDIARIES TOOK PLACE IN PURSUANCE OF AN ACTUAL CONTRACT OF SALE; IN FACT THESE TRANSFERS OF SCRAP FROM ONE UNDERTAKING TO ANOTHER ARE SUBJECTED AS SUCH TO THE LEVY .

FURTHERMORE, AS APPEARS FROM WHAT HAS BEEN SAID ABOVE, THE USE BY A SUBSIDIARY OF SCRAP PRODUCED BY ANOTHER SUBSIDIARY WHICH, ALTHOUGH UNDER THE CONTROL OF THE SAME PARENT COMPANY AND BELONGING TO THE SAME GROUP, HAS A SEPARATE LEGAL PERSONALITY, CANNOT BE REGARDED AS IMPLYING AN INCREASE IN THE PRODUCTIVITY OF THE UNDERTAKING CONSUMING THE SCRAP LOOKED AT AS AN ENTITY, IN THE MEANING SPECIFIED BY THE COURT IN ITS JUDGMENTS IN JOINED CASES 32 AND 33/58 AND CASE 42/58 ( REC . 1958-1959, P . 306 AND P . 406 ).

IT FOLLOWS THAT TO EXEMPT THIS SCRAP WOULD CONFER UNFAIR ADVANTAGES ON THAT UNDERTAKING AND SO DISTORT COMPETITION .

FINALLY, AS REGARDS THE CLAUSE DEALING WITH THE RETENTION OF OWNERSHIP OF THE SCRAP, WHICH IS REFERRED TO BY THE APPLICANT, IT MUST BE OBSERVED THAT, TO SECURE EFFECTIVELY A RETENTION OF OWNERSHIP IN THE DISPUTED SCRAP, IT WOULD BE NECESSARY TO ATTRIBUTE TO THIS CLAUSE TAKEN BY ITSELF AN ACTUAL EFFECT ON THE OWNERSHIP OF THAT PART OF THE STEEL WHICH IS AFTERWARDS RECOVERED AS SCRAP .

IN ANY EVENT THE RETENTION OF OWNERSHIP OF A CONSTITUENT PART OF A THING, A PART THE QUALITY AND QUANTITY OF WHICH ARE UNDETERMINED, IS NOT PERMISSIBLE UNDER PARAGRAPH 93 OF THE GERMAN CIVIL CODE RELATING TO THE OWNERSHIP OF THINGS SITUATED IN THE FEDERAL REPUBLIC . MOREOVER SUCH A CLAUSE IS INCOMPATIBLE WITH THE FUNDAMENTAL PRINCIPLES OF THE RIGHT OF OWNERSHIP IN FORCE IN ALL THE MEMBER STATES, PRINCIPLES FINDING EXPRESSION IN THE CONCEPT OF ACCESSION WHICH PRESUPPOSES THAT SPECIAL RIGHTS OF OWNERSHIP OVER A CONSTITUENT AND INDETERMINATE PART OF THE SAME THING ARE EXCLUDED .

IT FOLLOWS THAT THE ARGUMENTS INVOKED BY THE DEFENDANT IN THIS RESPECT MUST ALSO BE REJECTED .

4 . THE COMPLAINT OF DISCRIMINATION

THE APPLICANT ACCUSES THE DEFENDANT OF HAVING INFRINGED ARTICLES 3 ( B ) AND 4 ( B ) OF THE TREATY ON THE GROUND THAT THE FORMAL CONCEPT OF AN UNDERTAKING USED BY THE HIGH AUTHORITY FOR THE PURPOSES OF EQUALIZATION LED TO DISCRIMINATION AGAINST IT BY PUTTING IT IN AN UNFAVOURABLE POSITION IN RELATION TO COMPETING UNDERTAKINGS .

P . 375

THE DEFENDANT RAISES A PRELIMINARY OBJECTION TO THE ADMISSIBILITY OF THIS COMPLAINT BECAUSE THE APPLICANT HAS NOT INVOKED IT IN RELATION TO THE SUBSIDIARY COMPANIES, WHILST IT WAS PRECISELY THESE, AND NOT THE APPLICANT PARENT COMPANY, WHICH PRODUCED THE STEEL AND WERE THEREFORE CHARGED WITH THE CONTRIBUTION .

IT IS TO BE OBSERVED HOWEVER THAT THE APPLICANT SUCCEEDED TO ALL THE LEGAL RELATIONSHIPS OF ITS FORMER SUBSIDIARIES .

THEREFORE, WHILST THE APPLICANT HAS NOT EXPRESSLY INVOKED THE COMPLAINT OF DISCRIMINATION IN RESPECT OF ITS FORMER SUBSIDIARIES - WHICH WOULD HAVE GONE AGAINST THE ARGUMENT ON THE CONCEPT OF AN UNDERTAKING - IT NEVERTHELESS SUBSTANTIALLY REPRESENTS THE POSITION IN WHICH THE SUBSIDIARY COMPANIES THEMSELVES WERE INTERESTED .

IN THESE CIRCUMSTANCES THE OBJECTION OF INADMISSIBILITY IS BASED ON THE SIMPLE ISSUE OF THE FORMULATION OF THE COMPLAINT AND SHOULD THEREFORE BE DISMISSED .

IT IS APPROPRIATE THEREFORE TO TURN TO AN EXAMINATION OF THE SUBSTANCE OF THE CASE .

THE APPLICANT MAINTAINS THAT AT THE TIME WHEN THE EQUALIZATION SCHEME WAS IN FORCE IT WAS IN AN IDENTICAL SITUATION, AS REGARDS ITS PRODUCTION, TO THAT OF COMPETING UNDERTAKINGS IN THE FORM OF A SINGLE LEGAL PERSON COMPRISING DIFFERENT BRANCHES .

HOWEVER, EVEN IF THIS ASSERTION IS FACTUALLY CORRECT, AND IF IT BE ADMITTED THAT THE DIFFERENCE IN TREATMENT CLAIMED BROUGHT NOT INCONSIDERABLE DISADVANTAGES TO THE APPLICANT IN RELATION TO THOSE OF ITS COMPETITORS NOT SUBJECT TO EQUALIZATION CHARGES, THAT OF ITSELF IS NOT A SUFFICIENT GROUND FOR ADMITTING THE EXISTENCE OF A FORM OF DISCRIMINATION PROHIBITED BY THE TREATY .

FOR THE HIGH AUTHORITY TO BE ACCUSED OF DISCRIMINATION IT MUST BE SHOWN TO HAVE TREATED LIKE CASES DIFFERENTLY THEREBY SUBJECTING SOME TO DISADVANTAGES AS OPPOSED TO OTHERS WITHOUT SUCH DIFFERENTIATION BEING JUSTIFIED BY THE EXISTENCE OF SUBSTANTIAL OBJECTIVE DIFFERENCES .

ON THE OTHER HAND IN THIS CASE IN SPITE OF IDENTICAL CIRCUMSTANCES AS REGARDS PRODUCTION, THE APPLICANT BY REASON OF ITS LEGAL STRUCTURE INCORPORATING SEVERAL UNDERTAKINGS WAS NOT IN A SIMILAR POSITION TO THAT OF ITS COMPETITORS WHO FORMED A SINGLE LEGAL ENTITY . THIS DIFFERENCE IS OF IMPORTANCE IN LAW AND IS THEREFORE CAPABLE OF JUSTIFYING DIFFERENT TREATMENT .

P . 376

IN THESE CIRCUMSTANCES IT IS OF NO AVAIL TO EXAMINE THE POINTS OF IDENTITY, THE SIMILARITIES AND THE DIFFERENCES OF DETAIL EXISTING BETWEEN THE APPLICANT AND THE PHOENIX-RHEINROHR COMPANY .

IT IS SUFFICIENT TO OBSERVE THAT THAT COMPANY CANNOT BE IN A SITUATION COMPARABLE TO THAT OF THE APPLICANT FOR THE PURPOSES OF THE APPLICATION OF EQUALIZATION CHARGES FOR THE VERY REASON THAT ITS VARIOUS ACTIVITIES TAKE PLACE WITHIN THE FRAMEWORK OF A SINGLE UNDERTAKING .

THUS THE ARGUMENTS ADVANCED BY THE APPLICANT STRESSING THE CLOSE TIES BETWEEN THE PARENT COMPANY AND ITS SUBSIDIARIES, IN PARTICULAR BY REASON OF 'ORGANSCHAFT' ( INTER-GROUP ) CONTRACTS, WITH A VIEW TO DEMONSTRATING THE SIMILARITIES TO COMPANIES THE DIFFERENT BRANCHES OF WHICH WERE COMBINED IN A SINGLE LEGAL PERSON, ARE OF NO SIGNIFICANCE IN THE PRESENT CASE BECAUSE THEY CAN IN NO WAY ELIMINATE THE FUNDAMENTAL DIFFERENCE WHICH HAS BEEN DECLARED TO EXIST BETWEEN A GROUP OF UNDERTAKINGS AND AN UNDERTAKING CONSIDERED AS A SINGLE ENTITY .

THE PRINCIPLE RECOGNIZED BY THE COURT IN JOINED CASES 32 AND 33/58 ( REC . 1958-1959, P . 307 ) THAT ANY INTERVENTION BY THE HIGH AUTHORITY WHICH MADE THE COST OF PRODUCTION OF STEEL DEPENDENT UPON THE LEGAL, ADMINISTRATIVE OR FINANCIAL STRUCTURE OF INDUSTRIAL GROUPS WOULD BE ILLEGAL, SO FAR FROM SUPPORTING THE APPLICANT'S ARGUMENTS, AS IT CLAIMS, CONFLICTS WITH THEM . IN FACT, THIS DECISION OF THE COURT, CONFIRMING THE VALIDITY OF THE CRITERION OF THE LEGAL PERSON AND DECLARING THAT THE PARTICULAR STRUCTURES OF ECONOMIC GROUPS ARE OF NO CONSEQUENCE, HAS SETTLED, CLEARLY AND IN A WAY WHICH LEAVES NO ROOM FOR EXCEPTIONS, THE QUESTION WHETHER GROUP SCRAP COULD BE EQUATED WITH OWN RESOURCES OF ONE AND THE SAME UNDERTAKING .

THIS CONCLUSION FLOWS LOGICALLY FROM THE CONCEPT OF AN UNDERTAKING AND FOR THE PURPOSES OF THE EQUALIZATION SCHEME AND IS ALSO JUSTIFIED BY THE PRACTICAL ADVANTAGES OF A SIMPLE AND CLEAR CRITERION . IT IS TRUE THAT THE APPLICANT COMPANY MIGHT HAVE FOUND THE USE OF A DIFFERENT CRITERION, TAKING ACCOUNT OF THE DIFFERENCES BETWEEN THE VARIOUS TYPES OF INDUSTRIAL GROUPS, MORE FAVOURABLE TO IT . HOWEVER, IN VIEW OF THE INFINITE VARIATIONS, ACTUAL AND POSSIBLE, IN GROUP RELATIONS AND THE DIFFICULTIES WHICH WOULD ARISE IN MANY CASES IN MAKING A HARD AND FAST CLASSIFICATION OF GROUPS IN DIFFERENT CATEGORIES, IT MUST BE ADMITTED THAT A SYSTEM OF THIS KIND MIGHT HAVE GIVEN RISE IN PRACTICE TO SERIOUS UNCERTAINTIES, WOULD HAVE HINDERED THE SMOOTH WORKING OF THE EQUALIZATION SCHEME AND WOULD HAVE PROVIDED A SOURCE OF POSSIBLE DISCRIMINATION .

P . 377

MOREOVER, IN ESTABLISHING FINANCIAL ARRANGEMENTS TO SAFEGUARD THE STABILITY OF THE MARKET, IT RESTS WITH THE HIGH AUTHORITY TO CHOOSE THE SYSTEM WHICH IT DEEMS MOST LIKELY TO SERVE THE COMMON INTERESTS . IT IS OPEN TO THE COURT TO CENSURE THIS CHOICE ONLY IF IT APPEARS THAT THE HIGH AUTHORITY HAS EXCEEDED THE OBJECTIVE LIMITS TO ITS ACTIVITY OUTLINED BY THE TREATY . THIS IS NOT SO IN THE PRESENT CASE .

IN THE CIRCUMSTANCES THE APPLICANT HAS NOT PROVED THAT THE CRITERION ADOPTED IN THE BASIC DECISIONS IS EITHER IRRELEVANT OR PURELY ARBITRARY OR THAT IN ITSELF IT INVOLVES DISCRIMINATION .

THEREFORE THE COMPLAINT OF ILLEGALITY RAISED BY THE APPLICANT AGAINST THE BASIC DECISIONS AND BASED ON THE ALLEGATION THAT TO BE COMPATIBLE WITH THE TREATY THESE DECISIONS SHOULD HAVE CHARGED ALL USE OF SCRAP WITH EQUALIZATION EVEN AS REGARDS SCRAP RECOVERED AND RE-USED WITHIN A SINGLE LEGAL PERSON, EXCEPT FOR SCRAP PRODUCED BY THE STEEL-WORKS AND RE-USED BY IT, CANNOT BE ACCEPTED .

CONSEQUENTLY THE COMPLAINT OF DISCRIMINATION RAISED BY THE APPLICANT SHOULD BE DISMISSED .

II - SUBMISSION REGARDING INFRINGEMENT OF AN ESSENTIAL PROCEDURAL REQUIREMENT AND LACK OF COMPETENCE

THE APPLICANT MAINTAINS THAT THE BASIC DECISIONS WERE TAKEN WITHOUT OBSERVING EITHER THE ESSENTIAL PROCEDURAL REQUIREMENTS OF ARTICLE 15 OF THE TREATY OR THE RULES OF COMPETENCE ON WHICH THE LEGALITY OF THE ACTION OF THE HIGH AUTHORITY DEPENDS . HOWEVER, THE APPLICANT HAS NOT SHOWN THAT ITS CLAIM IS WELL FOUNDED . IT HAS CONFINED ITSELF TO ASSERTING IN GENERAL TERMS A DIVERGENCE BETWEEN THE INTENTION OF THE COUNCIL OF MINISTERS AND THE ACTUAL CONTENT OF THE BASIC DECISIONS .

MOREOVER THE COURT SEES NOTHING OBJECTIVE TO JUSTIFY THE APPLICANT'S ARGUMENT . THIS OBJECTION MUST THEREFORE BE DISMISSED AS UNFOUNDED .

Decision on costs

UNDER THE TERMS OF ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE OF THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS .

THE APPLICANT HAS FAILED IN ITS APPLICATION .

THE APPLICANT HAS CLAIMED THAT THE DEFENDANT SHOULD BE ORDERED TO BEAR THE COSTS, EVEN IF THE COURT DISMISSES ITS APPLICATION ON THE GROUND THAT THE DISPUTED DECISION IS RESTRICTED IN ITS SCOPE TO REJECTING THE REQUEST FOR EXEMPTION WITHOUT TOUCHING ON THE PRINCIPLE OF THE LIABILITY FOR THE CONTRIBUTION . HOWEVER THIS IS NOT SO IN THE PRESENT CASE .

THE APPLICANT MUST THEREFORE BEAR THE COSTS, INCLUDING THOSE OF THE INTERVENER .

Operative part

THE COURT

HEREBY

1 . DISMISSES THE APPLICATION IN CASE 19/61 AS UNFOUNDED;

2 . ORDERS THE APPLICANT TO PAY THE COSTS, INCLUDING THOSE OF THE INTERVENER .