(b)

The allegation that the contested general decisions have no legal basis The applicants' second submission is that the contested decisions have no legal basis either in Article 58 of the ECSC Treaty or in Articles 14 or 16 of Decision No 1831/81 or Articles 14 or 18 of Decision No 1696/82. In view of the general ground of action on which the Walzstahl-Vereinigung primarily relies, namely misuse of powers, this submission must in my view, at least as far as this applicant is concerned, be understood as a contention that in this case the Commission used its powers under Article 16 of Decision No 1831/81 or Article 18 of Decision No 1696/82 for a purpose other than that for which they were intended or may be used. The misuse of powers is perceived to be the fact that the Commission favoured a specific production structure and a specific region when there is no basis for that in either Article 58 or Articles 16 and 18 of the two general decisions. It is contended that the Commission in fact used those articles in this case to escape the restrictive conditions governing the application of Article 14, the hardship clause, of the general decisions. Lastly, it is contended that the Commission's arguments are self-contradictory since in the second quarter of 1982 an abatement rate of 35% had already been regarded as a threat to the very existence of the single-product undertaking, whereas in the third quarter, despite the further slump in the market in concrete reinforcing bars, an abatement rate of 42% was considered sufficient to avert that threat. In my view, we should begin our consideration of this submission with an interpretation of Articles 16 and 18 of the general decisions. As I have already pointed out, those provisions enable the necessary adjustments to be made by general decision if radical changes occur in the steel market. The Court will recall that at the hearing counsel for the Commission, in answer to a question from the Judge-Rapporteur, gave an interesting account of the Commission's interpretation of the basic requirement of “radical changes in the steel market” laid down in Articles 16 and 18. In its view, contrary to normal usage, the expression “steel market” must primarily be understood as meaning “that part of the steel market covered by the quota system”, thus not a completely free market. Consequently, the articles in question must in its view be construed with reference to the aims of the quota system and account must be taken of the situation in which specific groups of producers — in this case the single-product undertakings — find themselves as a result of the quota system. In this case the quota system deprived single-product undertakings of most of the competitive advantage which they normally have (owing, I would add, to their lower production costs). In addition, it is agreed, account should be taken of the fact that owing to the scheme and purpose of the quota system the same quotas affect structurally different undertakings in quite different ways. The Commission must therefore from time to time carry out certain adjustments in order to restore the desired balance. On this last point counsel for the Commission drew a not entirely appropriate comparison with Noah's Ark, in which the undertakings to be rescued are all accommodated but whose captain must change course from time to time. I say not entirely appropriate because this is not a case of changing course in a way that has the same effect on all the undertakings to be rescued but of creating more space inside the Ark for a specific group of endangered undertakings. Quite irrespective of that bold comparison, however, I consider the interpretation that the Commission thus appears to place on the expression “radical changes in the steel market” unacceptable. In the first place it is too far removed from the wording of the provisions cited. It is certainly not without good reason that the basic precondition for intervention laid down in Articles 16 and 18 is formulated quite differently from Article 14 of the decisions in question. Secondly, I think that such an artificial interpretation, in which the expression “radical changes in the steel market” is in fact replaced by the requirement of “drastic consequences of the quota system for certain groups of undertakings on the steel market” and thus by a sort of general equitable provision similar to the individual hardship provision of Article 14, is unnecessary in order to arrive at a satisfactory interpretation of the articles in question. Thirdly, the preamble to the contested decisions, in my view, affords sufficient support for a more plausible interpretation of the articles. I have already pointed out that the basic decisions by no means completely prevent the operation of the market mechanism even on the supply side. I will now add that by its nature the quota system does not affect, or hardly affects, growth on the demand side of the market. Paragraph 2 of the preamble to Decision No 533/82 expressly cites as the reasons for the intervention the considerable downturn in demand for concrete reinforcing bars, the increase in stocks and the considerable fall in prices. I consider that such reasons are sufficient to satisfy the requirement of “radical changes in the steel market”. In view of that conclusion alone I believe that there can be no question of the Commission's having acted without authority in adopting the contested decisions. The other reasons for intervening given by counsel for the Commission are in my view at most grounds for arranging the adjustment measures adopted in a certain way. Articles 16 and 18 of the relevant general implementing decisions merely provide in this regard that the adjustments must be necessary and this requirement of necessity must naturally be primarily related to the radical changes found to exist on the steel market. In addition, the adjustments must naturally take into account the general aims of Article 58, including the prohibition of discrimination and the principle of equitableness and must not be manifestly contrary to the quota system as a whole. I shall consider whether the contested decisions are consistent with the aims and principles mentioned in Article 58 when I come to discuss the applicants' third and fourth submissions. At this stage, therefore, I shall merely analyse the contested decisions with reference to the scheme of the general quota systems. Paragraph 4 of the preamble to Decision No 533/82 makes it clear in this regard that in this case the Commission did indeed use its powers under Article 16 of the general decision in order to give preferential treatment, on equitable grounds, to an entire group of undertakings which had encountered exceptional difficulties owing to the market situation. Since in this connection the Commission refers inter alia to the passage in the preamble to the general decision which, in the Commission's own submission, relates solely to the possibility afforded by Article 14 of making exceptions in individual cases, one may ask whether Article 16 was used for a purpose for which it was clearly not intended. In the same paragraph of the preamble the expression “radical changes in the steel market” gives way to an assertion that “the system of quotas will clearly create exceptional difficulties for the undertakings referred to in point 3 above”. I have already commented that I regard such a replacement of the criterion in Article 16 by an essentially different criterion as unacceptable. I therefore agree with the applicants that the reason given does appear to indicate that Article 16 was clearly used for purposes other than those for which it was intended, namely in order to evade the restrictive conditions of Article 14 with regard to undertakings in exceptional difficulties. In this regard it is, as I have already pointed out, also relevant that, in contrast to Article 16, Article 14 clearly links the exceptional difficulties from which it provides relief to the quota system as the cause and not to changes in the market situation. Nevertheless, I would still not conclude from that statement of reasons in the first contested decision or from paragraph 3 of the preamble to the second contested decision, which is to the same effect, that the Commission has misused its powers. I have in fact already argued with reference to the interpretation which the Commission places on the basic requirement of Articles 16 and 18 of the relevant general decisions, which I consider unacceptable, that in elaborating the adjustments necessitated by market developments and not by the quota system the Commission can and must in particular take into account the general aims of Article 58 and the principle of equitableness laid down in that article. I must therefore defer a definitive opinion on the question whether the contested decisions amount to a misuse of powers until I have considered the remaining submissions.