1.

In relation to the first point the applicant relies principally upon a communication from the Commission of July 1980 which refers to a decline in orders caused by a fall in demand in the United States. But that is said to be irrelevant with regard to concrete reinforcing bars because transport costs would render the American market unprofitable for such products. Furthermore, in the proposal submitted to the Council by the Commission on 6 October 1980 the emphasis was placed upon the reduced utilization of capacity in crude steel. According to the applicant, that cannot serve to establish the existence of a crisis in concrete reinforcing bars, because crude steel can in fact be processed into other products and furthermore an increase in the production of concrete reinforcing bars, which was hampered by the system of quotas, could have helped to mitigate the crisis. Furthermore, the Commission itself had stated that in the first half of 1980 the delivery programmes for concrete reinforcing bars had been increasingly disregarded, which, according to the applicant, indicates that there was an increase in production caused by a rise in demand. It is also pointed out that even in 1977 only 50% of the producers of concrete reinforcing bars participated in delivery programmes, whilst in other sectors up to 90% of the producers participated. It may be that both of the Commission documents referred to by the applicant were insufficiently clear with regard to the difficulties on the market in concrete reinforcing bars, although it should not be overlooked that in the document of July 1980 mention was made not only of the United States market, but also, for example, of the Iranian market and reference was also made in it to large-scale changes and to the particularly difficult situation in the construction industry together with a resultant decline in production. It must also be noted that the Commission's proposal to the Council did not refer exclusively to crude steel and the difficulties facing it, but on the contrary stated that in accordance with the production forecasts for the principal processing sectors a fall in the consumption of steel must be expected. However, the decisive factor is that at any rate in the course of the proceedings it became entirely clear that reference was properly made to a crisis, not only for the steel market as such, but also for the market in concrete reinforcing bars in particular, which may be assumed to be due in no small measure to the fact that since 1977 only 50% of the manufacturers of concrete reinforcing bars have participated in production limitation programmes, that is to say that from that time no progress could be made in quantitative reductions. I do not need to repeat now what was said in detail concerning the steel market as such. The situation on the market in concrete reinforcing bars in particular deteriorated owing above all to the state of the building industry as early as the beginning of 1980; since May 1980 a genuine crisis was discernible with a progressive fall in orders and a correspondingly low utilization of production plant. That situation was aggravated by the fact that in the fourth quarter of 1980 the products in Group IV, as the Commission has shown, remained almost 12% below the quotas fixed and that the applicant itself, with an annual capacity of 230400 tonnes, produced only 81000 tonnes in the first ten months of 1980. Thus it is proper to consider that the market in concrete reinforcing bars was affected by a manifest crisis which, moreover, was not limited to a few sectors where undertakings produce only one kind of product, as the applicant considers, and indeed other arguments advanced in this connection by the applicant give no grounds for doubting that the conditions required for the application of Article 58 (1) were fulfilled. In the light of what has been stated above the view that it is not practical in a crisis affecting the crude steel sector to reduce the demand for processed products, such as concrete reinforcing bars, is irrelevant. The same applies to the applicant's claims that the fall in the price of concrete reinforcing bars, to which the Commission devoted so much attention, is to be explained largely by the increase in competition between manufacturers and that — if the decline in the price of crude steel is disregarded — the fall in 1980 was only very slight. The same goes for the applicant's suggestion that the appropriate solution in such a market situation was to fix minimum prices. Finally, in this connection it is unnecessary to consider whether, as the Commission thinks, the fall in the prices of concrete reinforcing bars was more pronounced than the applicant calculated because the cost of such bars is determined only as to 40% by the cost of the basic material and it may be assumed that, when the market is unfavourable, the price of the end product determines the price of the basic material. It is in any case clear that, for the Commission, the important factor was not the fall in price but, as is provided in Article 58, the extent of the decline in demand. However, with regard to the applicant's view that minimum prices would have been the appropriate solution in such a situation, it must certainly be conceded that the Commission is right in maintaining that intervention with regard to prices would only have been effective if voluntary restrictions on production had also been adopted and, since the latter could not be attained for the fourth quarter of 1980, the Commission was therefore correct in considering price controls insufficient.