Judgment of the Court of 17 July 1959. - Société des aciers fins de l'Est (S.A.F.E.) v High Authority of the European Coal and Steel Community. - Case 42/58.



European Court reports

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Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

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1 . LEGAL PROCEDURE - APPLICATION FOR ANNULMENT - TIME-LIMIT FOR BRINGING PROCEEDINGS - UNCERTAINTY OF THE DATE OF NOTIFICATION

2 . APPLICATION FOR ANNULMENT - DEFINITION OF THE DECISION - CRITERIA APPLICABLE IN THE LEGAL CLASSIFICATION OF A MEASURE OF THE HIGH AUTHORITY - EFFECT OF DECLARATIONS MADE BY SERVANTS OF THE HIGH AUTHORITY - DISTINCTION BETWEEN A DECISION AND AN INTERNAL OFFICE DIRECTIVE 3 . APPLICATION FOR ANNULMENT - OBJECTION OF ILLEGALITY - REVIEW OF THE PRINCIPLES ESTABLISHED BY AN INTERNAL STAFF NOTICE

4 . FINANCIAL ARRANGEMENTS - EQUALIZATION LEVY ON BOUGHT FERROUS SCRAP - DEFINITION OF THE EXPRESSIONS " OWN RESOURCES " AND " BOUGHT FERROUS SCRAP " - SUPPLY OF FERROUS SCRAP WITHIN A GROUP OF UNDERTAKINGS ( CONCENTRATION ) - LEGALITY OF ASSESSING SUCH SUPPLY SCRAP TO EQUALIZATION LEVY - LEGALITY OF THE EXEMPTION OF " OWN RESOURCES "

5 . DISCRIMINATION - DEFINITION - MEASURES AND INTERVENTIONS LIABLE TO DISTORT COMPETITION

6 . PRODUCTIVITY - DEFINITION - INTERVENTIONS OF THE HIGH AUTHORITY - CARTELS AND CONCENTRATIONS - COMPETITION

Summary

1 . WHERE THE DATE ON WHICH THE HIGH AUTHORITY HAS SENT A LETTER NOTIFYING A DECISION TO THE INTERESTED PARTY IS ESTABLISHED, BUT WHERE, HOWEVER, THE DATE ON WHICH THE LETTER ARRIVED IS UNCERTAIN, AN APPLICATION AGAINST THE DECISION IS CONSIDERED OUT OF TIME FROM THE MOMENT WHEN, ON THE FACTS, IT WOULD SEEM UNREASONABLE TO SUPPOSE THAT THE LETTER ARRIVED LATE ENOUGH FOR THE TIME-LIMIT TO HAVE BEEN OBSERVED . ( THIRD PARAGRAPH OF ARTICLE 33 OF THE TREATY ESTABLISHING THE ECSC; RULES OF PROCEDURE OF THE COURT OF JUSTICE OF THE ECSC, ARTICLE 85 ( 1 ) AND ( 2 ).)

2 . CF . SUMMARY, JUDGMENT IN CASE 20/58 OF 6 JULY 1959 :

( A ) THE LEGAL ASSESSMENT OF A MEASURE BY THE HIGH AUTHORITY DEPENDS ABOVE ALL ON ITS SUBJECT-MATTER AND ON ITS CONTENT .

( B ) WHEN THE HIGH AUTHORITY SENDS A LETTER TO AN AUXILIARY AGENCY ENTRUSTED BY IT WITH THE EXECUTION OF CERTAIN PRECISE FUNCTIONS, INFORMING IT OF CERTAIN GENERAL PRINCIPLES AND IN PARTICULAR INSTRUCTING IT TO CONTINUE A CERTAIN PRACTICE FOLLOWED UP TILL THEN, THAT LETTER MAY CONSTITUTE A MERE INTERNAL OFFICE DIRECTIVE, EVEN IF IT WAS PUBLISHED IN THE JOURNAL OFFICIEL AND IF IT REFERS TO MEASURES WHICH THE AGENCY MUST TAKE IN REGARD TO UNDERTAKINGS IN THE COMMUNITY . IN ANY EVENT, THIS IS TRUE IF IT EMERGES FROM THE LETTER THAT THE HIGH AUTHORITY DID NOT INTEND TO TAKE A DECISION, BUT INTENDED MERELY TO CONFIRM PRINCIPLES WHICH IT BELIEVED, RIGHTLY OR WRONGLY, TO BE LOGICALLY TO INFER FROM ITS PREVIOUS DECISIONS . THE FACT THAT A SERVANT OF THE HIGH AUTHORITY HAS DESCRIBED SUCH A LETTER TO A THIRD PARTY AS A " DECISION " DOES NOT INVALIDATE THE ABOVE STATEMENT ( TREATY ESTABLISHING THE ECSC, ARTICLE 33 ).

*/ 658J0020 /*.

3 . CF . PARAGRAPH 4, SUMMARY, JUDGMENT IN JOINED CASES 32 AND 33/58 OF 6 JULY 1959 :

WHERE THE HIGH AUTHORITY APPLIES PRINCIPLES WHICH IT HAS ESTABLISHED BY AN INTERNAL STAFF NOTICE AND WHICH DEAL WITH THE INTERPRETATION OF A GENERAL DECISION, THE SOUNDNESS OF THAT INTERPRETATION MAY BE REVIEWED IN AN APPLICATION FOR ANNULMENT BROUGHT AGAINST AN INDIVIDUAL DECISION .

( TREATY ESTABLISHING THE ECSC, ARTICLE 33 )

*/ 658J0032 /*.

4 . CF . PARAGRAPH 6, SUMMARY, JUDGMENT IN JOINED CASES 32 AND 33/58 OF 6 JULY 1959 :

( A ) WHERE THE HIGH AUTHORITY ESTABLISHES FINANCIAL ARRANGEMENTS IN ORDER TO ENSURE AN ORDERLY SUPPLY OF FERROUS SCRAP IN THE COMMON MARKET, AND WHERE, IN SO DOING, IT PROVIDES THAT THE UNDERTAKINGS SHALL BE SUBJECT TO A LEVY FOR BOUGHT FERROUS SCRAP, WHEREAS OWN RESOURCES ARE EXEMPT, DELIVERIES OF SCRAP TO AN UNDERTAKING OPERATING UNDER ANOTHER COMPANY NAME ARE NOT TO BE REGARDED AS OWN RESOURCES, EVEN IF THE TWO UNDERTAKINGS ARE CLOSELY LINKED AS REGARDS THEIR ADMINISTRATION, ORGANIZATION OR FINANCES (" GROUP FERROUS SCRAP ").

( B ) THE EXONERATION OF GROUP FERROUS SCRAP WOULD BE DISCRIMINATORY, BECAUSE IT WOULD LEAD TO A SITUATION IN WHICH THE PRODUCTION OF STEEL, WHICH IS WHOLLY OR PARTLY BASED ON SCRAP, WOULD DEPEND ON THE LEGAL, FINANCIAL OR ORGANIZATIONAL STRUCTURE OF INDUSTRIAL GROUPS, AND SUCH STRUCTURES ARE OFTEN SUBJECT TO CHANGE .

( C ) HOWEVER, THE EXONERATION OF OWN RESOURCES IS LEGAL, IN PARTICULAR BECAUSE IT FAVOURS AN INCREASE IN PRODUCTION WHICH IS EXCLUSIVELY THE RESULT OF THE PARTICULAR EFFORTS OF VARIOUS UNDERTAKINGS AND WHICH IS, THEREFORE, IN ACCORD WITH THE PRINCIPLE OF COMPETITION, AND ALSO BECAUSE IT RESULTS, FROM A REASONING A MAJORE AD MINUS BASED ON THE SECOND PARAGRAPH OF ANNEX II ( B ) TO THE TREATY ESTABLISHING THE ECSC, THAT " UNDERTAKINGS'OWN ARISINGS " MUST BE FAVOURED A FORTIORI IN THE CASE OF INDIRECT INTERVENTIONS ON THE PART OF THE HIGH AUTHORITY .

( TREATY ESTABLISHING THE ECSC, SECOND PARAGRAPH OF ARTICLE 2, ARTICLES 3 ( B ), 4 ( B ), 53, 59, 60 ( 1 ), 67 AND 80 AND ANNEX II ( B ), SECOND PARAGRAPH; DECISION NO 2/57 OF THE HIGH AUTHORITY, ARTICLES 2 AND 4; LETTER OF THE HIGH AUTHORITY OF 18.12.1957 TO THE OCCF, JO OF 1.2.1958, P . 45 ET SEQ .)

*/ 658J0032 /*.

5 . CF . SUMMARY IN JOINED CASES 32 AND 33/58 OF 6 JULY 1959, NO 7 :

THE FOLLOWING MEASURES MUST BE CONSIDERED AS DISCRIMINATORY IN PRINCIPLE AND, ACCORDINGLY, PROHIBITED BY THE TREATY, INTER ALIA, MEASURES OR INTERVENTIONS, INCLUDING THOSE OF THE HIGH AUTHORITY, WHICH ARE CALCULATED SUBSTANTIALLY TO INCREASE DIFFERENCES IN PRODUCTION COSTS OTHERWISE THAN THROUGH CHANGES IN PRODUCTIVITY, AND WHICH, BY REASON OF THAT FACT, PROVOKE APPRECIABLE DISTURBANCES IN THE COMPETITIVE EQUILIBRIUM OF THE UNDERTAKINGS CONCERNED, THAT IS TO SAY, WHICH CREATE OR RESULT IN AN ARTIFICIAL AND SIGNIFICANT DISTORTION OF COMPETITION .

( TREATY ESTABLISHING THE ECSC, SECOND PARAGRAPH OF ARTICLE 2, ARTICLES 3 ( B ), 4 ( B ), 60 AND 67 )

*/ 658J0032 /*.

6 . CF . PARAGRAPH 8, SUMMARY, JUDGMENT IN JOINED CASES 32 AND 33/58 OF 6 JULY 1959 :

THE GENERAL STRUCTURE OF THE TREATY AND ITS FUNDAMENTAL PRINCIPLES GIVE RISE TO THE SUPPOSITION THAT THE EXPRESSION " PRODUCTIVITY " IN ARTICLE 67 REFERS ONLY TO THE RESULTS OF THE EFFORTS OF A PARTICULAR UNDERTAKING . IN PARTICULAR, THE TREATY MUST BE UNDERSTOOD AS BEING CONTRARY TO AN IMPROVEMENT IN THE COMPETITIVE POSITION OF AN UNDERTAKING WHICH IS DUE TO INTERVENTIONS OF PUBLIC AUTHORITIES OR TO THE CREATION OF A CARTEL OR A CONCENTRATION . ALL THESE OPERATIONS ARE TO BE REGARDED AS ARTIFICIAL EFFECTS ON COMPETITION EVEN WHEN THEY ARE AUTHORIZED OR CAPABLE OF BEING AUTHORIZED . ( TREATY ESTABLISHING THE ECSC, ARTICLE 67 )

*/ 658J0032 /*.

Parties

IN CASE 42/58

SOCIETE DES ACIERS FINS DE L'EST ( SAFE ), LIMITED COMPANY WHOSE REGISTERED OFFICE IS IN PARIS, REPRESENTED BY ITS MANAGING DIRECTOR EUGENE DE SEZE, ASSISTED BY P . O . LAPIE AND JEAN DE RICHEMONT, BOTH ADVOCATES AT THE COUR D'APPEL, PARIS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF GEORGES MARGUE, 6 RUE ALPHONSE-MUNCHEN, APPLICANT,

V

HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, REPRESENTED BY ITS LEGAL ADVISER, FRANS VAN HOUTEN, ACTING AS AGENT, ASSISTED BY JEAN COUTARD, ADVOCATE OF THE CONSEIL D'ETAT, PARIS, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT ITS OFFICES, 2 PLACE DE METZ, DEFENDANT,

Subject of the case

APPLICATION FOR ANNULMENT AND AN ACTION FOR FAILURE TO ACT AND OBJECTIONS OF ILLEGALITY IN RESPECT OF THE LETTER FROM THE MARKET DIVISION OF THE HIGH AUTHORITY OF 31 JULY 1958, NOTIFIED TO THE APPLICANT, AGAINST THE IMPLIED DECISION OF REFUSAL ALLEGEDLY RESULTING FROM THE ABSENCE OF A REPLY FROM THE ADMINISTRATION TO A REQUEST FOR EXEMPTION SUBMITTED BY THE APPLICANT, AND AGAINST THE LETTERS OF THE HIGH AUTHORITY OF 18 DECEMBER 1957 AND 17 APRIL 1958 ( JO OF 1.2.1958, P . 45 ET SEQ ., AND OF 13.5.1958, P . 30 ET SEQ .),

Grounds

P . 190

ADMISSIBILITY

1 . WAS THE APPLICATION AGAINST THE LETTER FROM THE MARKET DIVISION OF THE HIGH AUTHORITY OF 31 JULY 1958 LODGED WITHIN THE PRESCRIBED PERIOD?

IT IS ONLY " IN SO FAR AS NECESSARY " THAT THE APPLICANT CONTESTS THAT LETTER, WHICH IT DESCRIBES AS A " DECISION TO POSTPONE TAKING A DECISION ".

IF THE LETTER OF 31 JULY 1958 CONSTITUTES A DECISION, THAT FACT MUST AFFECT THE DECISION OF THE COURT ON THE ACTION FOR FAILURE TO ACT BECAUSE THE APPLICANT COULD NOT THEN SUBSTANTIATE THE ARGUMENT THAT THE DEFENDANT DID NOT ADOPT ANY DECISION WITHIN THE PERIOD OF TWO MONTHS SUBSEQUENT TO THE APPLICANT'S LETTER OF 23 JULY 1958 . THEREFORE THE ADMISSIBILITY OF THIS APPLICATION SHOULD BE EXAMINED .

THE DEFENDANT RAISES THE SUBMISSION OF INADMISSIBILITY ON THE GROUND THAT THE APPLICATION AGAINST THE LETTER OF 31 JULY 1958 WAS NOT LODGED WITHIN THE PRESCRIBED PERIOD . THE REGISTERED OFFICE OF THE APPLICANT IS IN PARIS, THAT IS, IN METROPOLITAN FRANCE . THEREFORE, UNDER THE THIRD PARAGRAPH OF ARTICLE 33 OF THE ECSC TREATY AND ARTICLE 85 ( 1 ) AND ( 2 ) OF THE RULES OF PROCEDURE OF THE COURT OF JUSTICE OF THE ECSC, THE PERIOD WITHIN WHICH THE APPLICANT HAD TO CONTEST THE SAID LETTER EXPIRED ONE MONTH AND THREE DAYS FROM THE DAY FOLLOWING NOTIFICATION THEREOF .

THE APPLICATION WAS LODGED AT THE COURT REGISTRY ON 20 OCTOBER 1958 . ACCORDINGLY, IT WAS ONLY MADE WITHIN THE PRESCRIBED PERIOD IF THE LETTER OF 31 JULY 1958 ONLY REACHED THE APPLICANT ON 17 SEPTEMBER 1958 AT THE EARLIEST .

THE APPLICANT, UPON BEING ASKED QUESTIONS ABOUT THIS BY THE COURT, DID NOT SUPPLY ANY EXPLANATION . HOWEVER, THE DEFENDANT FORMALLY DECLARED THAT THE SAID LETTER WAS ENTERED IN ITS REGISTER OF OUTGOING MAIL UNDER THE DATE OF 1 AUGUST 1958 . THAT STATEMENT HAS NOT BEEN CONTESTED BY THE APPLICANT . NEVERTHELESS, IT HAS NOT BEEN POSSIBLE TO ESTABLISH THE PRECISE DATE ON WHICH THE SAID LETTER REACHED THE APPLICANT .

HOWEVER, IT WOULD SEEM UNREASONABLE TO SUPPOSE THAT A LETTER SENT FROM LUXEMBOURG ON 1 AUGUST 1958 AND WHICH THE APPLICANT ADMITS HAVING RECEIVED DID NOT REACH BOULOGNE-BILLANCOURT TO WHICH IT WAS ADDRESSED, BEFORE 17 SEPTEMBER 1958 . ACCORDINGLY, IT IS ESTABLISHED THAT THE APPLICATION AGAINST THE LETTER OF 31 JULY 1958 WAS NOT LODGED WITHIN THE PRESCRIBED PERIOD .

THEREFORE, THIS APPLICATION IS INADMISSIBLE .

2 . IS THE ACTION FOR FAILURE TO ACT ADMISSIBLE?

P . 191

THE DEFENDANT DOES NOT RAISE ANY OBJECTIONS AS TO THE ADMISSIBILITY OF THE ACTION FOR FAILURE TO ACT, IN THAT IT ADMITS THAT NO DECISION WAS ADOPTED WITHIN THE PERIOD OF TWO MONTHS LAID DOWN IN THE FIRST PARAGRAPH OF ARTICLE 35 OF THE ECSC TREATY . THAT QUESTION HOWEVER, MUST BE EXAMINED BY THE COURT OF ITS OWN MOTION .

THE ONLY ANSWER TO THE APPLICANT'S LETTER OF 23 JULY 1958 WHEREBY IT LODGED A REQUEST FOR EXEMPTION WITH THE HIGH AUTHORITY WAS A LETTER FROM THE DIRECTOR OF THE MARKET DIVISION OF THE HIGH AUTHORITY DATED 31 JULY 1958 STATING THAT THE QUESTION WAS " UNDER STUDY ". THAT LETTER DOES NOT CONSTITUTE A DECISION WITHIN THE MEANING OF THE TREATY .

THERE WAS, THEREFORE, AN IMPLIED DECISION OF REFUSAL AS MEANT BY THE AFORESAID ARTICLE 35 . THE ACTION BROUGHT AGAINST THAT DECISION WAS CLEARLY WITHIN THE PRESCRIBED PERIOD .

THE ACTION FOR FAILURE TO ACT IS THEREFORE ADMISSIBLE .

SUBSTANCE

1 . CAN THE APPLICANT RAISE AN OBJECTION OF ILLEGALITY AGAINST THE LETTERS OF THE HIGH AUTHORITY OF 18 DECEMBER 1957 AND 17 APRIL 1958?

ACCORDING TO THE ESTABLISHED CASE-LAW OF THE COURT, AN UNDERTAKING WHICH CONTESTS AN INDIVIDUAL DECISION IS ENTITLED TO RAISE THE OBJECTION OF ILLEGALITY AGAINST THE GENERAL DECISIONS ON WHICH THEY ARE BASED . THE PARTIES ARE IN AGREEMENT ABOUT THE FACT THAT THE IMPLIED DECISION OF REFUSAL RESULTING FROM THE ABSENCE OF A REPLY FOR MORE THAN TWO MONTHS FROM THE HIGH AUTHORITY TO THE LETTER FROM THE APPLICANT OF 23 JULY 1958 IS BASED ON THE PRINCIPLES SET OUT IN THE ABOVEMENTIONED LETTERS OF THE HIGH AUTHORITY; AND SUCH INDEED IS MANIFESTLY THE CASE . THE QUESTION THEREFORE ARISES WHETHER THOSE LETTERS CONTITUTE DECISIONS .

( A ) DOES THE LETTER OF 18 DECEMBER 1957 CONSTITUTE A DECISION?

THE LETTER FROM THE HIGH AUTHORITY DATED 18 DECEMBER 1957 STATES A GENERAL PRINCIPLE IN THAT IT REFERS TO THE DEFINITION OF THE CONCEPT OF " OWN RESOURCES " REGARDING FERROUS SCRAP .

THAT LETTER WAS PUBLISHED IN THE JOURNAL OFFICIEL OF 1 FEBRUARY 1958 AND THUS BROUGHT TO THE NOTICE OF ALL THE UNDERTAKINGS OF THE COMMUNITY .

IT WAS DESCRIBED AS A " DECISION " BY THE MARKET DIVISION, IN A LETTER OF 19 FEBRUARY 1958, IN ANSWER TO A FORMAL QUESTION MADE BY THE DEUTSCHE SCHROTTVERBRAUCHERGEMEINSCHAFT TO THE HIGH AUTHORITY ON 6 FEBRUARY 1958 .

P . 192

NEVERTHELESS, CONTRARY TO THE APPLICANT'S ARGUMENTS, THE SAID LETTER OF 18 DECEMBER 1957 CANNOT LEGALLY BE CONSIDERED AS A DECISION WITHIN THE MEANING OF THE TREATY .

ADMITTEDLY, THE LETTER OF 18 DECEMBER 1957 WAS IN ANSWER TO A REQUEST FROM THE OCCF, WHOSE MEMBERS HAD FAILED TO AGREE ON THE MEANING OF THE WORDS " OWN RESOURCES ", AND WHICH HAD THEREFORE CALLED UPON THE HIGH AUTHORITY TO DEFINE THAT CONCEPT PURSUANT TO THE SECOND PARAGRAPH OF ARTICLE 15 OF DECISION NO 2/57 . BUT THE HIGH AUTHORITY REPLIED THAT THE PROBLEM THUS EXPRESSED BY THE OCCF " WAS WRONGLY PUT ", IN VIEW OF THE FACT THAT THE OCCF HAD " FROM THE BEGINNING BY IMPLICATION ADOPTED THE CONCEPT OF OWN RESOURCES ACCORDING TO THE SEMANTIC MEANING OF THE TERM ", AND THAT THAT CRITERION SHOULD BE MAINTAINED .

IT FOLLOWS THAT THE HIGH AUTHORITY DID NOT INTEND TO TAKE A DECISION, AS IT HAD BEEN FORMALLY INVITED TO DO, BUT SIMPLY TO REAFFIRM THE PRINCIPLE WHICH, RIGHTLY OR WRONGLY, IT CONSIDERED TO EMERGE LOGICALLY FROM THE BASIC DECISION NO 2/57 .

THIS FINDING IS CONFIRMED BY THE FACT THAT BY ARTICLE 53 ( B ) OF THE TREATY AN AMENDMENT TO DECISION NO 2/57 WOULD HAVE REQUIRED THE PRIOR UNANIMOUS ASSENT OF THE COUNCIL OF MINISTERS, AND THAT CONDITION WAS NOT FULFILLED IN THIS CASE . MOREOVER, THERE IS NOTHING TO SUGGEST THAT THE HIGH AUTHORITY KNOWINGLY DISREGARDED THAT BINDING REQUIREMENT .

THESE CONSIDERATIONS ARE NOT INVALIDATED BY THE FACT THAT, IN ANSWER TO A FORMAL QUESTION FROM THE DEUTSCHE SCHROTTVERBRAUCHERGEMEINSCHAFT TO THE HIGH AUTHORITY ON 6 FEBRUARY 1958, THE MARKET DIVISION REPLIED BY LETTER OF 19 FEBRUARY 1958 THAT THE LETTER OF 18 DECEMBER 1957 WAS INDEED A " DECISION ".

IN FACT, THAT ANSWER FROM THE MARKET DIVISION EXPRESSES, AS IT ITSELF SAYS, THE OPINION OF AN OFFICIAL OF THE HIGH AUTHORITY AND DOES NOT NECESSARILY OF ITSELF REFLECT THE INTENTIONS OF THE HIGH AUTHORITY IN THE MATTER .

HOWEVER, THE VARIOUS SUBJECTIVE ELEMENTS SET OUT ABOVE CANNOT OF THEMSELVES BE DECISIVE IN DETERMINING THE NATURE OF THE SAID LETTER OF 18 DECEMBER 1957, FOR THE NATURE OF A MEASURE DEPENDS PRIMARILY ON ITS SUBJECT-MATTER AND CONTENT .

THE SAID LETTER APPEARS AS BEING AN INTERNAL INSTRUCTION ADDRESSED BY AN IMMEDIATE SUPERIOR TO THE DEPARTMENT UNDER HIS CHARGE AND INTENDED TO ORIENTATE THE ACTIVITIES OF THAT DEPARTMENT .

THUS, WHILE THE LETTER MAY HAVE GIVEN RISE TO IMMEDIATE OBLIGATIONS, IT CAN ONLY HAVE DONE SO AS REGARDS THE AGENCY TO WHICH IT WAS ADDRESSED AND NOT AS REGARDS UNDERTAKINGS CONSUMING FERROUS SCRAP . THIS VIEW OF THE MATTER, MOREOVER, IS SUPPORTED BY THE FACT THAT THE SAID LETTER OF 18 DECEMBER 1957 WAS ONLY PUBLISHED IN THE JOURNAL OFFICIEL ON 1 FEBRUARY 1958 .

P . 193

THEREFORE THE LETTER OF 18 DECEMBER 1957 IS NOT A A DECISION WITHIN THE MEANING OF THE TREATY .

( B ) DOES THE LETTER OF 17 APRIL 1958 CONSTITUTE A DECISION?

GENERALLY, THE CONSIDERATIONS DEVELOPED ABOVE IN RESPECT OF THE LETTER OF 18 DECEMBER 1957 ARE EQUALLY VALID FOR THE LETTER OF 17 APRIL 1958 .

MORE PARTICULARLY, ITS PURPOSE IS ONLY TO EXPLAIN TO THE OCCF THE REASONS WHY THE HIGH AUTHORITY, IN ITS LETTER OF 18 DECEMBER, APPROVED THE EXEMPTIONS GRANTED TO TWO SPECIFIC UNDERTAKINGS, SAYING THAT THE WORKS OF THOSE UNDERTAKINGS WERE " LOCALLY INTEGRATED WITH ONE OR SEVERAL WORKS NOT BELONGING TO THEM, IN WHICH FERROUS SCRAP IS RECOVERED ".

THUS THE LETTER DOES NOT SET OUT A NEW PRINCIPLE, BUT MERELY EXPRESSLY STATES A PRINCIPLE WHICH THE ADMINISTRATION HAS ALREADY APPLIED BY IMPLICATION IN IMPLEMENTING DECISION NO 2/57 .

THEREFORE THE LETTER OF 17 APRIL 1958 DOES NOT CONSTITUTE A DECISION WITHIN THE MEANING OF THE TREATY .

2 . MAY THE COURT EXAMINE THE LEGALITY OF THE PRINCIPLES SET OUT IN THE LETTERS OF 18 DECEMBER 1957 AND 17 APRIL 1958?

FROM THE MOMENT WHEN THE PRINCIPLES SET OUT IN THE ABOVEMENTIONED LETTERS WERE APPLIED BY THE ADMINISTRATION, THEY FORMED PART OF THE INTERPRETATION AND APPLICATION OF DECISION NO 2/57 .

THE HIGH AUTHORITY'S INTERPRETATION HAS AFFECTED THE APPLICANT'S RIGHTS FROM THE MOMENT WHEN THE AGENCIES TO WHICH THE LETTERS OF 18 DECEMBER 1957 AND 17 APRIL 1958 WERE ADDRESSED APPLIED THAT INTERPRETATION IN RESPECT OF IT .

THE QUESTION SHOULD THEREFORE BE EXAMINED WHETHER THE INTERPRETATION OF DECISION NO 2/57, AS IT APPEARS FROM THE LETTERS OF 18 DECEMBER 1957 AND 17 APRIL 1958, IS LEGAL .

3 . IS IT LEGAL TO SUBJECT GROUP FERROUS SCRAP TO EQUALIZATION?

P . 194

( A ) ARTICLE 2 OF DECISION NO 2/57 PROVIDES THAT " UNDERTAKINGS OF THE KIND DESCRIBED IN ARTICLE 80 OF THE TREATY WHICH CONSUME FERROUS SCRAP SHALL BE ASSESSABLE TO PAYMENT OF CONTRIBUTIONS " UNDER THE EQUALIZATION SCHEME .

ARTICLE 4 OF THE SAME DECISION STATES THAT THOSE CONTRIBUTIONS SHALL BE CALCULATED ON THE BASIS OF SUPPLIES OF " BOUGHT FERROUS SCRAP " WHEREAS " OWN RESOURCES " SHALL BE EXEMPT FROM EQUALIZATION .

THE DELIVERIES OF FERROUS SCRAP TO THE APPLICANT REGIE RENAULT CONSTITUTE PURCHASES, BECAUSE THERE IS AN AGREEMENT FOR THE PASSING OF PROPERTY AGAINST A PRICE .

BY REASON OF THE FACT, ACCORDING TO THE WORDING OF DECISION NO 2/57 SUCH SCRAP IS SUBJECT TO EQUALIZATION . THE APPLICANT REQUESTS EXEMPTION, TAKING THE VIEW THAT GROUP SCRAP SHOULD BE ASSIMILATED TO OWN RESOURCES . IT IS THEREFORE NECESSARY TO EXAMINE WHETHER SUCH ASSIMILATION IS JUSTIFIED .

( B ) AS APPEARS FROM A READING OF THE LETTER OF 18 DECEMBER 1957, THE HIGH AUTHORITY INTERPRETS THE CONCEPT OF " OWN RESOURCES " AS MEANING THAT IT IS ONLY SCRAP RECOVERED BY AN UNDERTAKING IN ITS OWN ESTABLISHMENTS BEARING THE SAME COMPANY NAME THAT IS CONSIDERED AS " OWN RESOURCES ", WHEREAS SCRAP SUPPLIED BY A WORKS RUN UNDER ANOTHER COMPANY NAME IS CONSIDERED AS BOUGHT SCRAP, EVEN IN THE CASE WHERE CLOSE FINANCIAL OR ADMINISTRATIVE LINKS EXIST BETWEEN THE SUPPLIER AND THE USER .

( C ) HOWEVER, IT IS NECESSARY TO EXAMINE WHETHER THE ASSESSING OF GROUP SCRAP TO THE LEVY - AND THE EXEMPTION FOR OWN ARISINGS - IS COMPATIBLE WITH THE PURPOSES OF THE FINANCIAL ARRANGEMENT CONSTITUTED BY THE EQUALIZATION SYSTEM .

( I ) ACCORDING TO THE APPLICANT, THERE IS NO VALID REASON FOR SUBJECTING GROUP SCRAP TO THE EQUALIZATION SYSTEM, BECAUSE THE OPERATIONS BETWEEN THE VARIOUS AFFILIATED UNDERTAKINGS TAKE PLACE OUTSIDE THE MARKET IN FERROUS SCRAP AND DO NOT, BY REASON OF THAT FACT, EXERCISE ANY INFLUENCE ON THE EVOLUTION OF PRICES .

ACCORDING TO THE APPLICANT, THE PURPOSE OF EQUALIZATION IS TO MAINTAIN THE PRICES OF FERROUS SCRAP AT A REASONABLE LEVEL, SO THAT ANY TRANSFER OF SCRAP NOT LIABLE TO HAVE REPERCUSSIONS ON THE LEVEL OF PRICES MUST BE EXEMPTED FROM EQUALIZATION .

IN FACT, THE PURPOSE OF EQUALIZATION IS TO MAINTAIN THE PRICE OF FERROUS SCRAP AT AN ACCEPTABLE LVEL; HOWEVER, IN ORDER TO ACHIEVE THAT OBJECTIVE, THE HIGH AUTHORITY HAS ESTABLISHED FINANCIAL ARRANGEMENTS THE PRINCIPLE OF WHICH IS TO ENSURE THAT THE EXCESS PRICE OF IMPORTED FERROUS SCRAP IS BORNE BY ALL THE CONSUMERS OF FERROUS SCRAP .

IT IS NOT PARTICIPATION IN THE FERROUS SCRAP MARKET WHICH GIVES RISE TO THE EQUALIZATION LEVY, BUT THE CONSUMPTION OF FERROUS SCRAP .

P . 195

ALL CONSUMERS ARE THEREFORE AUTOMATICALLY REQUIRED TO PAY EQUALIZATION CONTRIBUTIONS IN ORDER TO FINANCE THE EQUALIZATION FUND .

THEREFORE, THIS COMPLAINT PUT FORWARD BY THE APPLICANT MUST BE REJECTED .

( II ) HOWEVER, DECISION NO 2/57 PROVIDES FOR A DISTINCTION BETWEEN BOUGHT FERROUS SCRAP AND OWN RESOURCES, AND THIS CONSTITUTES, AS REGARDS THE LATTER, AN EXCEPTION TO THE GENERAL RULE MENTIONED ABOVE .

IT IS THEREFORE NECESSARY TO EXAMINE WHETHER THE EXONERATION OF OWN RESOURCES IS LEGAL .

THAT EXCEPTION PRIMARILY CONCERNS OWN ARISINGS FROM THE PRODUCTION OF STEEL BY THE UNDERTAKINGS SUBJECT TO THE JURISDICTION OF THE COMMUNITY .

IF THOSE ARISINGS WERE SUBJECT TO EQUALIZATION CONTRIBUTIONS, THERE WOULD BE A PROBABILITY OF CHARGING THE SAME QUANTITY OF FERROUS SCRAP TWICE OVER, WHICH WOULD BE MANIFESTLY UNJUST .

( D ) THE REASONING SET OUT ABOVE IS CONFIRMED BY THE CONCEPT OF DISCRIMINATION AS IT APPEARS IN PARTICULAR FROM THE SECOND PARAGRAPH OF ARTICLE 2 AND ARTICLES 3 ( B ), 60 AND 67 OF THE TREATY .

( I ) ON THE BASIS OF THE ABOVEMENTIONED PROVISIONS THERE MAY BE CONSIDERED AS DISCRIMINATORY IN PRINCIPLE AND, ACCORDINGLY, PROHIBITED BY THE TREATY, INTER ALIA, ANY ACTION OR INTERVENTION, EVEN ONE EMANATING FROM THE HIGH AUTHORITY, WHICH IS CALCULATED, BY SUBSTANTIALLY INCREASING DIFFERENCES IN PRODUCTION COSTS OTHERWISE THAN THROUGH CHANGES IN PRODUCTIVITY, TO PROVOKE AN APPRECIABLE DISEQUILIBRIUM IN THE COMPETITIVE POSITION OF THE UNDERTAKINGS CONCERNED .

IN OTHER WORDS, ANY INTERVENTION ATTEMPTING TO DISTORT OR ACTUALLY DISTORTING COMPETITION ARTIFICIALLY AND SIGNIFICANTLY MUST BE REGARDED AS DISCRIMINATORY AND INCOMPATIBLE WITH THE TREATY, WHILST MEASURES WHICH TAKE INTO ACCOUNT THE INTERNAL ORGANIZATION OF AN UNDERTAKING AND THE USE BY IT OF ITS OWN RESOURCES CANNOT BE REGARDED AS DISCRIMINATORY .

THE USE OF ITS OWN ARISINGS BY A SINGLE UNDERTAKING PRODUCING STEEL AND USING FERROUS SCRAP AMOUNTS TO A PRODUCTION RE-CYCLING OF ONE OF ITS BY-PRODUCTS .

THIS BEING SO, SUCH A USE IN THE PROCESS OF THE PRODUCTION OF STEEL FROM FERROUS SCRAP CLEARLY REPRESENTS AN INCREASE IN THE QUANTITY OF STEEL OBTAINED FROM THE SAME QUANTITY OF FERROUS SCRAP, WHICH HAS ALREADY BEEN SUBJECTED TO EQUALIZATION . IT THUS REPRESENTS AN ACQUIRED INCREASE IN PRODUCTIVITY .

P . 196

TO SAY THAT AN INTERVENTION ENCOURAGING THOSE INTERNAL MEASURES OF ECONOMY DISTORTS COMPETITION IS THE VERY OPPOSITE OF THE TRUTH . SUCH AN INTERVENTION FAVOURS CHANGES IN PRODUCTIVITY IN THE DIRECTION OF GREATER PRODUCTIVITY, BY THE FORM OF COMPETITION DESCRIBED IN GERMAN AS " LEISTUNGSWETTBEWERB ", AND THEREFORE ACCORDS WITH THE TREATY .

MOREOVER IT APPEARS FROM ANNEX II TO THE ECSC TREATY, SECOND PARAGRAPH OF ( B ), THAT " UNDERTAKINGS'OWN ARISINGS " ENJOYS PRIVILEGED TREATMENT EVEN IN THE CASE OF A DIRECT INTERVENTION UNDER ARTICLE 59 OF THE TREATY . THEREFORE A FORTIORI THEY MUST ALSO RECEIVE PRIVILEGED TREATMENT IN THE APPLICATION OF INDIRECT MEASURES OF INTERVENTION SUCH AS THOSE AUTHORIZED BY ARTICLE 53 .

IT FOLLOWS FROM EVERYTHING THAT HAS BEEN SAID ABOVE THAT THE EXEMPTION OF OWN RESOURCES IS NOT DISCRIMINATORY AND IS THEREFORE LEGITIMATE .

( II ) TO ASSIMILATE GROUP SCRAP TO OWN ARISINGS WOULD BE TO GO BEYOND THE MEANING OF AND THE REASON FOR THE EXEMPTION AND WOULD CONSTITUTE A DISCRIMINATORY ADVANTAGE AS REGARDS OTHER UNDERTAKINGS .

THE LOWERING OF PRODUCTION COSTS CONSEQUENT UPON AN EXONERATION FOR GROUP SCRAP WOULD, IN THE WORDS OF ARTICLE 67 OF THE TREATY, BE LIABLE SUBSTANTIALLY TO INCREASE DIFFERENCES IN PRODUCTION COSTS AS BETWEEN THOSE UNDERTAKINGS AND THOSE WHICH ALSO PRODUCE STEEL FROM FERROUS SCRAP BUT WHICH ARE NOT INTEGRATED WITH AN UNDERTAKING PRODUCING THAT RAW MATERIAL .

THAT INCREASE IN THE DIFFERENCES IN PRODUCTION COSTS WOULD NOT RESULT FROM CHANGES IN PRODUCTIVITY, BUT WOULD BE THE EFFECT OF CONTINGENT, GEOGRAPHICAL, ADMINISTRATIVE OR FINANCIAL TIES, WHICH ARE AT THE BASIS OF THE CONCEPT OF A " GROUP ". IT MUST BE OBSERVED FROM THE SCHEME OF THE TREATY AND FROM ITS FUNDAMENTAL PRINCIPLES THAT THE WORD " PRODUCTIVITY " REFERS EXCLUSIVELY TO THE RESULTS OF THE EFFECTS MADE BY AN UNDERTAKING . IN PARTICULAR, IT MUST BE UNDERSTOOD AS DISTINCT FROM AND AS AGAINST ANY IMPROVEMENT IN THE COMPETITIVE POSITION OF AN UNDERTAKING WHICH IS DUE EITHER TO INTERVENTIONS OF PUBLIC AUTHORITIES, OR TO THE CREATION OF A CARTEL OR A CONCENTRATION, BECAUSE ALL THESE OPERATIONS, EVEN WHERE AUTHORIZED OR CAPABLE OF BEING AUTHORIZED, ARTIFICIALLY ALTER THE NORMAL EFFECT OF COMPETITION .

( E ) IT WOULD BE MANIFESTLY CONTRARY TO THE REQUIREMENTS OF THE TREATY IF, AS A RESULT OF AN INTERVENTION ON THE PART OF THE HIGH AUTHORITY, THE PRODUCTION COSTS OF STEEL MANUFACTURED IN WHOLE OR IN PART FROM FERROUS SCRAP WERE TO DEPEND ON THE LEGAL, ADMINISTRATIVE OR FINANCIAL STRUCTURE OF INDUSTRIAL GROUPS .

THE CHANGES IN THE LEGAL STRUCTURE OF THE GROUP, THE EXISTENCE OF WHICH IS STRESSED BY THE APPLICANT, ONLY GO TO SHOW THAT SUCH CHANGES ARE ARBITRARY AND AVAILABLE UPON A MOMENT'S NOTIVE, AND TO PREVENT THERE BEING SEEN THEREIN ANY FACTOR SPECIFIC TO THE PRODUCTIVITY OF THE STEEL-PRODUCING UNDERTAKING .

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( F ) FOR ALL THESE REASONS, ALTHOUGH THE EXONERATION OF OWN ARISINGS IS COMPATIBLE WITH THE PROVISIONS OF THE TREATY, AN EXONERATION FOR GROUP SCRAP WOULD BRING ABOUT DISCRIMINATION PROHIBITED BY ARTICLE 4 OF THE TREATY .

IN VIEW OF THAT FACT, THE LATTER EXONERATION MUST ITSELF BE TAKEN TO BE PROHIBITED BY THE TREATY, WITHOUT ITS BEING NECESSARY, IN THE PRESENT CASE, TO RULE ON THE QUESTION WHETHER OR NOT FERROUS SCRAP ORIGINATING FROM AN UNDERTAKING WHICH IS NOT A PRODUCER OF STEEL AND IS NOT, THEREFORE, SUBJECT TO THE JURISDICTION OF THE COMMUNITY SHOULD, FOR THAT REASON, BE EXEMPT FROM EQUALIZATION, EVEN IF IT FORMS PART OF A GROUP WITH THE UNDERTAKING USING THE FERROUS SCRAP OR IS RUN UNDER THE SAME COMPANY NAME .

IT RESULTS FROM THE FOREGOING CONSIDERATIONS THAT THE DEFENDANT ACTED LEGALLY IN APPLYING THE PRINCIPLE THAT SO-CALLED GROUP FERROUS SCRAP MUST BE CONSIDERED AS BOUGHT FERROUS SCRAP AND, THEREFORE, AS SUBJECT TO EQUALIZATION, AND IN REAFFIRMING THAT PRINCIPLE IN ITS LETTER OF 18 DECEMBER 1957 .

4 . THE ARGUMENTS BASED ON THE EXEMPTIONS ALREADY GRANTED .

THE APPLICANT HAS ALSO ALLEGED THAT THE HIGH AUTHORITY HAS EXONERATED CERTAIN UNDERTAKINGS IN SO FAR AS THEY CONSUME FERROUS SCRAP FROM WORKS WHICH, WITHOUT BEARING THE SAME COMPANY NAME AS THE CONSUMER WORKS, ARE " LOCALLY INTEGRATED " WITH THE LATTER .

HOWEVER, THE APPLICANT HAS NOT RAISED THE QUESTION WHETHER SUCH EXONERATIONS ARE COMPATIBLE WITH THE PURPOSE AND THE SCHEME OF THE EQUALIZATION SYSTEM .

MOREOVER THAT QUESTION CANNOT BE DECIDED IN THE CONTEXT OF THE PRESENT DISPUTE .

THE FACT THAT THE HIGH AUTHORITY OR ITS DEPARTMENT MAY, IN CERTAIN CASES, HAVE GIVEN TOO WIDE AN INTERPRETATION OF THE CONCEPT OF " OWN ARISINGS " CANNOT JUSTIFY THE GRANT OF AN EXEMPTION FROM THE LEVY IN OTHER MORE OR LESS COMPARABLE CASES, SINCE SUCH GRANT IS CONTRARY TO THE VERY PRINCIPLES OF THE EQUALIZATION SYSTEM .

ON THOSE GROUNDS, SINCE THE REQUEST FOR EXEMPTION SUBMITTED BY THE APPLICANT IS UNFOUNDED, ITS ACTION FOR FAILURE TO ACT IN RESPECT OF THE IMPLIED DECISION OF REFUSAL MUST BE DISMISSED .

Decision on costs

UNDER THE TERMS OF ARTICLE 60 ( 1 ) OF THE RULES OF PROCEDURE OF THE COURT OF JUSTICE OF THE ECSC, THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS .

IN THE PRESENT CASE THE APPLICANT HAS FAILED IN ALL ITS SUBMISSIONS . IT MUST THEREFORE BE ORDERED TO BEAR THE COSTS .

Operative part

THE COURT

HEREBY :

1 . DISMISSES THE APPLICATION DIRECTED AGAINST THE IMPLIED DECISION OF REFUSAL RESULTING FROM THE ABSENCE OF A REPLY FOR MORE THAN TWO MONTHS BY THE DEFENDANT TO THE APPLICANT'S LETTER OF 23 JULY 1958 AS UNFOUNDED;

2 . DISMISSES THE APPLICATION DIRECTED AGAINST THE LETTER FROM THE MARKET DIVISION OF THE HIGH AUTHORITY OF 31 JULY 1958 AS INADMISSIBLE .

3 . ORDERS THE APPLICANT TO BEAR THE COSTS .