OPINION OF MR ADVOCATE GENERAL

VERLOREN VAN THEMAAT

DELIVERED ON 7 OCTOBER 1982 ( 1 )

AND CONFIRMED AT THE SITTING ON 2 DECEMBER 1982

Mr President,

Members of the Court,

1. Introduction

In Case 258/81 Metallurgiki Halyps AE, to which I shall refer as “Halyps” or the applicant, seeks a declaration that the individual decision of 12 August 1981 by which the Commission fixed in particular its production and delivery quotas for Categories V and VI (concrete reinforcing bars and merchant bars) for the third quarter of 1981 is void. In point of fact, however, its application does not concern the terms of the individual decision but the alleged illegality of the general Decision 1831/81 /ECSC on which it is based. Halyps originally adduced four submissions in support of its objection of illegality but withdrew the last two during the proceedings. For details of those submissions and other relevant facts I refer to the Report for the Hearing.

By the first of its remaining submissions Halyps contends that Decision 1831/81 is contrary to the Act concerning the accession of Greece to the European Communities and to general principles of law. It relies in particular on (a) the spirit and purpose of the transitional measures adopted in the Act of Accession, (b) the impossibility of applying Article 58 of the ECSC Treaty to the Greek steel industry during the transitional period and (c) breaches of the principles of legal certainty, of legitimate expectation and of the right to property. I shall consider the first submission in Part 2 of my Opinion. However, I think it may be useful to point out here and now that the arguments put forward in support of that submission differ considerably from the arguments which were central to the Court's judgment of 16 February 1982 in the Greek steel cases, 39, 43, 85 and 88/81. The main emphasis of Halyps' argument is not on general legal considerations, such as those with which the first Greek steel cases were concerned, but more on the specific economic problems of adaptation of Greek industry in general and of the Greek steel industry in particular as well as on the Communities' recognition of those problems. As my examination of these matters will show, it cannot be denied that some of the arguments adduced in this regard have some economic and political merit. Hence the question is whether those arguments can support the legal conclusion drawn from them in the first submission.

When considering the second submission in Halyps' application, to the effect that Decision 1831/81 is void for infringement of Article 58 and Anieles I to 5 of the ECSC Treaty and for breach of the general principles deriving from those articles, it will also be necessary for me to consider the specific situation of Greece. I shall examine that submission in Pan 3 of this Opinion.

After some final observations I shall summarize my findings in the fourth pan of the Opinion.

2. The first submission

In Pan A of the applicant's arguments in suppon of the first submission, which is summarized in the Repon for the Hearing, it construes Anieles 25 to 34, 38, 116, 129(1) and 130 of and Protocols 3 and 7 to the Act of Accession as disclosing the objective of adapting the level of development of Greek industry in general and of the Greek steel industry in panicular to the level of development in the other Member States during a transitional period of five years.

The applicant contends that one of the reasons why that purpose can hardly be denied is that it is expressly recognized in the following passage contained in recital 6 of the preamble to the cenerai Decision 2804/81/ECSC of 23 September 1981 (Official Journal 1981, L 278) which was adopted well over a month after the contested individual decision:

“In Greece, industry as a whole is still in process of development; this implies that major structural changes will follow. New industries are emerging and expanding. In such a situation, the steel industry can play a particularly important pan in the industrialization of the country. However, the construction industry is a decisive element in steel consumption and the cyclical variations in that industry force the Greek steel industry to make constant effons to adjust, with concomitant fluctuations in production and investment. The fact that the new system of production quotas does not contain such a far-reaching derogation clause as its predecessor must not be allowed to jeopardize the success of such imponant effons to adjust or to make adjustment impossible. However, the Commission should relax the quotas only where individual undertakings or categories of products face specific difficulties” (emphasis added).

In my opinion it can indeed be deduced from the transitional provisions of the Act of Accession in general and from Protocol 7 (taken over from the “Irish” Protocol 30 which was adopted at the time of the first enlargement of the Communities) in panicular that the Communities sought to take account of the problems of adjustment and the development needs of Greek industry. For the simple reason that the development capacity of the Greek steel industry largely depends on the development of the rest of Greek industry I think that Protocol 7 is indirectly relevant also to the Greek steel industry. Moreover, the prevailing legal view is that Anieles 92 and 93 of the EEC Treaty also apply to regional and other general aids which are also applicable to the steel industry. The policy advocated in the protocol in this respect is therefore more directly relevant to the steel industry. Although I subscribe to the Commission's view that some of the applicant's arguments to which I have referred are not tenable, I do believe that it is in fact possible to argue that the Communities' steel policy, too, should not run counter to the recognized development needs of Greek industry.

However, for the purpose of considering the first submission I think it more important that even the applicant concedes that the Act of Accession does not contain any express derogation clause in relation to Article 58 of the ECSC Treaty. In fact in this part of its argument the applicant relies solely on the spirit and purpose of the Act of Accession which in Part B of its application it then considers sufficient, using a teleologica! and contextual method of interpretation, to exclude the application of Article 58 to the Greek steel industry during the aforesaid transitional period.

In my view that conclusion, which in Part B of its application Halyps draws from the purpose of the transitional provisions contained in the Act of Accession, cannot be accepted. As I argued in my Opinion in the Greek steel cases cited above, the general premise underlying Articles 2 and 9 of the Act of Accession is that from the date of accession the same rights and duties apply to the acceding State as apply to the old Member States, so far as nothing else is expressly agreed. As Puissochet argues on page 179 of his book on the first enlargement of the Communities which I cited in that Opinion, the derogations permitted by the Act of Accession should, like derogation clauses, in general, be strictly construed. In this regard I would also refer to paragraphs 10 and 11 of the decision of the Court in Case 231/78 Commission v United Kingdom [1979] ECR 1447 at p. 1459 in which this principle of strict interpretation was clearly confirmed with regard to the derogation clauses contained in the comparable Act of Accession at issue in that case. Therefore the spirit and purpose of transitional provisions contained in the Act of Accession may only be taken into account when Article 58 is actually applied to Greek undertakings.

With regard to the applicant's argument in support of its first submission there then only remains to consider the claim in Part C of its application that the principles of legal certainty, protection of legitimate expectation and the right to property were not observed. It is alleged that the first two principles were not observed inasmuch as the production limit imposed on the applicant pursuant to Decision 1831/81 frustrates the planning agreements on its production which it had previously made with the Greek Government. That argument must be rejected forthwith as the aforesaid principles of Community law may be pleaded solely in connection with legal acts governed by Community law. Such legal acts should guarantee sufficient legal certainty with regard to Communiy law and must not fail to respect legitimate expectation as to the development of Community law. The mere fact that Community law takes precedence over national law prevents that principle from being widened to guarantee the maintenance of rights which may be derived from national law. The argument also appears to be based on a broad interpretation of Protocol 3 to the Act of Accession and one which is not compatible with its wording. In fact that protocol solely concerns the maintenance of specifically agreed exemptions from import duties and not the maintenance of agreements of an entirely different kind made between the Greek Government and specific undertakings such as the undertaking in this action.

As regards the contention that the production limit imposed on the applicant restricted its right to property it is sufficient for me to refer to paragraph 89 of the decision of the Court in Joined Cases 154, 205, 206, 226 to 228, 263 and 264/78, 39, 31, 83 and 85/79 Valsabbia and Others [1980] ECR 907 in which, with reference to a previous decision, the Court held that: “... the guarantee afforded to the ownership of property cannot be extended to protect commercial interests, the uncertainties of which are part of the very essence of economic activity”. It seems clear to me that what was said there about the permissibility of interfering with freedom of trade also applies to the permissibility of restrictions on the freedom of production. Many examples of such restrictions may be seen not only in Community law but also in the national law of every Member State. I shall merely mention the numerous provisions on quality standards and environmental protection which restrict opportunities for production. For the economic reasons also justifying in principle the application of the steel-crisis measures in question to Greek undertakings, I should like to refer to my Opinion in the first Greek steel cases.

3. The second submission

The arguments put forward in support of the second submission are that Decision 1831/81 is contrary first to Articles 2, 3 and 4 of the ECSC Treaty, to which Article 58 (2) of that Treaty refers, on the ground of infringement of the principle of equality, secondly to Articles 1 to 5 of the ECSC Treaty and thirdly to the principle that rules such as those at issue may not be made retroactive which is what is alleged to have been done in this case by means of the contested individual decision.

The first-mentioned argument, to the effect that there was a breach of the principle of equality underlying Articles 2, 3 and 4 of the ECSC Treaty, is mainly based on the allegation that no account, or at any rate insufficient account, was taken of the particular circumstances and level of development of each individual undertaking and of the Greek undertakings in general. Since, however, it is also claimed in this same submission that Article 58 and the principles arising from all the aforesaid articles were infringed, the principle of fairness laid down in Article 58 (2) may also enter into consideration in this regard.

The breaches of the principle of equality are said to reside in the following matters in particular:

(a) The reference period was fixed for a period prior to the accession of Greece when the rate of utilization of the Greek steel industry was considerably lower — by 35 to 40 % — than the average rate of utilization of approximately 65 % in the Community as constituted at that time; Halyps itself did not commence operations until June 1977 and in 1980 was still only using about 45 % of its capacity as ascerlained by the Commission, the damage caused by earthquakes being partly responsible for this.

(b) During the reference period from 1978 to 1980 the steel industry of the Community as constituted at that time formed sufficient reserves whereas the less developed Greek steel undertakings meet less than 50 % of the needs of the Greek market.

(c) The Greek steel industry also suffers discrimination because it has to bear its high financing costs itself whereas most steel undertakings in the other Member States receive considerable State aid.

(d) Although the factual situation of the Greek steel industry is entirely different, a quota system applying throughout the Community is applied to that industry thereby infringing in addition the principle of proportionality because or the lower steel production in Greece.

Finally, Halyps refers in this regard to the fact that the production limits imposed on the Greek steel industry do not take account of its export obligations or of growing home demand for concrete reinforcing bars, which leads to a growth in imports of these products from nonmember countries. In my view this last point must be considered together with the test of fairness laid down in Article 58.

Secondly, the applicant considers that Article 1 of the ECSC Treaty has been infringed because the general Decision 1831/81 and the individual decision of 12 August 1981 based upon it ignore the enormous differences in structure, levels of development and rates of utilization between Greek steel undertakings and the rest of the Community steel industry. It is also contended that general Decision 1831/81 is contrary to the second paragraph of Article 2 of the ECSC Treaty, as interpreted for example in the judgment of the Court in Joined Cases 27 to 29/58 Compagnie des Hauts-Foumaux et Fonderies ae Givors and Others v High Authority of the ECSC [I960] ECR 241, and to Articles 3(d) and (g), 4 and 5 of the ECSC Treaty.

Thirdly, it is contended that because the applicant did not receive the individual decision concerning it until 24 August 1981 the production limit imposed on it was retroactive in effect, and that this was not permissible. That argument cannot be entertained in these proceedings for the simple reason that it obviously does not concern the general decision which is alleged to be unlawful.

With regard to the other arguments I should first like to make two general observations.

First, it is quite clear from the evidence before the Court that when the quota system was applied to the Greek steel industry a method of “trial and error” was applied for which some Greek steel undertakings may perhaps be held partly, although definitely not solely, responsible by not providing sufficient information. This is demonstrated by the introduction by Article 7a, which was inserted in Decision 1831/81 by Decision 1832/81 of 3 July 1981, of a special method of calculating reference production figures for concrete reinforcing bars and merchant bars for the Greek steel industry. The original individual decision of 12 August 1981 concerning Halyps was retroactively amended on 5 January 1982 during the course of the proceedings and again on 4 February 1982, in both cases considerably to Halyps's advantage. In these proceedings, which directly concern the alleged illegality of Decicion 1831/81, the question whether the original decision may have unreasonably restricted Halyps's production and production programmes during the third quarter of 1981 notwithstanding those later amendments can of course be'disregarded. The subsequent rectifications of the original individual decision nevertheless clearly illustrate the “trial and error” method by which the general decision in question was applied to the Greek steel industry. Finally, this somewhat improvised way of applying the general decision to the Greek steel industry is demonstrated by the introduction by Decision 2804/81 of 23 September 1981 of the special “fairness” clause, Article 14a, for Greek steel undertakings which was applied when the last two rectifications of Halyps's quota were made.

As appears from the reasons given for it in the recitals in the preamble to the decision, that last amendment in particular contains an express recognition of the particular adaptation needs of Greek industry in general and of the Greek steel industry in particular which should be taken into account when the quota system is applied to Greek steel undertakings. As I stated in my observations on Halyps' first submission, it may not be concluded from such particular adaptation needs that the quota system cannot be applied without qualification to the Greek steel industry during the transitional period. Since this very case shows that the particular problems of the Greek steel industry may vary greatly from one undertaking to another, the legitimacy of the principle reflected in the recitals in the preamble to Decision 2804/81 as well as in Article 14a that rectifications made to quotas in view of such problems of adjustment should be made on an undertaking-by-undertaking basis cannot in my view be challeged. Although it is to be regretted that Article 14a was not inserted in Decision 1831/81 until shortly before the end of the third quarter of 1981, I see no reason in the fact that the particular problems of the Greek steel industry were not recognized until that late stage for considering that the decision does not meet the criterion of fairness laid down in Article 58 or that it offends against the prohibition of discrimination pleaded by the applicant. Whether or not the contested individual decision is contrary to the aforementioned principles is a matter which can only be determined in proceedings brought against that decision itself. More generally, I think that, as regards the particular situation of the Greek steel industry and for an explanation of the continuing need to make new rectifications, it is also relevant to consider the point made by the Commission at the hearing that it still does not have sufficient statistical information about every sector of the Greek steel industry.

After making those general observations I can deal relatively briefly with the separate arguments put forward by the applicant in support of its second submission. A method by which a reference period is fixed and which in principle is the same for all undertakings cannot be regarded as being contrary to a principle of equality if, as in this case, it is possible for rectifications which take appropriate account of the relevant particular circumstances of the individual undertakings to be made to the reference production as well as to the production quota derived from it. The other arguments relating to the infringement of Anide 58 must likewise be rejected for the very same reason that it is possible for rectifications to be made in individual cases and this applies to the arguments derived from Article 1 of the ECSC Treaty.

The arguments which are derived from the second paragraph of Article 2 and from Article 5 of the ECSC Treaty and which are summarized in the Report for the Hearing are essentially directed, in their one-sided emphasis on the basic rules founded on the principle of the market economy laid down in those provisions, against any possibility of applying Article 58. They are therefore patently irreconcilable with the system of the Treaty and in addition are directed more against Article 58 than against the decisions implementing that article.

As far as the applicant's reliance on' Article 2, 3 and 4 of the ECSC Treaty in general and on Article 3 in particular is concerned, it is sufficient for me to refer to paragraph 21 of the decision of the Coun of 16 February of this year in Case 276/80 Ferriera Padana SpA v Commission [1982] ECR 517 in which the Court recalled that it “ has already stated that it is not certain that all the objectives of the Treaty can be simultaneously pursued in their entirety and in ail circumstances; it is the task of the Commission to effect a permanent compromise between those different objectives”.

With regard to the applicant's reliance on the prohibition of discrimination laid down in Article 4 (b) of the Treaty my first comment is that this is primarily a' prohibition of national discriminatory measures. However, in so far as a general principle of nondiscrimination applying to the Community institutions themselves may also be derived from that article, I would simply refer to what I have said earlier about the alleged breach of a principle of equality.

At the hearing Halyps put forward other entirely different arguments to support its allegation of discrimination. However, those arguments did not in fact relate to the alleged discrimination against Greek steel undertakings but to alleged discrimination against specialized producers of concrete reinforcing bars compared to undertakings producing a variety of products. Since those arguments constitute in fact a new submission they must be declared inadmissible and for that reason can be disregarded. Needless to say the Court will recall that at the hearing the Commission nevertheless contested the substance of those arguments at some length.

In conclusion the applicant's second submission must also be rejected for the reasons stated.

4. Final observations and conclusion

To conclude my examination of the case I should also like to draw the Court's attention to the fact that at the hearing the Commission not only pointed out, with the aid of figures which were not contested, that the production quotas and delivery quotas allocated to Halyps were repeatedly rectified but also that the applicant did not use up the quota which was eventually fixed in that way for the third quarter. At least as far as these proceedings are concerned, the fact that the most important rectification was made at a late stage does not seem to me a ground for denying the importance of the last observation in any broad evaluation of the general decision's effect on Halyps' position. I stated earlier that, whilst I consider it regrettable in particular that Article 14a was inserted into contested Decision 1831/81 at a late stage, I do not think this is a ground for considering the decision unlawful. The whole process of gradually adjusting general decisions to the specific situation of Greek steel undertakings may also be satisfactorily explained by problems of administrative practice which inevitably occur when such complicated arrangements are applied to factual situations of which there is insufficient knowledge at the outset.

In conclusion I consider that Halyps' action should be dismissed for the reasons I have given and that it should be ordered to pay the costs.

( 1 ) Translated from the Dutch.