Order of the President of the Court of 2 May 1988. - Associazione industrie siderurgiche italiane (Assider) v Commission of the European Communities. - ECSC - Production quotas - Conversion into delivery quotas. - Case 92/88 R.



European Court reports 1988 Page 02425



Parties

Grounds

Operative part



Keywords

++++

1 . Application for interim measures - Suspension of operation of decision - Conditions for granting - Prima facie case - Serious and irreparable damage

( ECSC Treaty, Art . 39; Rules of Procedure, Art . 83 ( 2 ) ).

2 . ECSC - Production - System of production and delivery quotas for steel - Commission' s obligations - Guarantee of a minimum production or of the maintenance of market share for a specific undertaking - None

( ECSC Treaty, Art . 58 )

Parties

In Case 92/88 R

Associazione industrie siderurgiche italiane ( Assider ), whose registered office is in Milan, represented by C . Grassetti and G . Greco, of the Milan Bar, with an address for service in Luxembourg at the Chambers of N . Schaeffer, 12 avenue de la Porte Neuve,

applicant,

v

Commission of the European Communities, represented by R . Waegenbaur, Legal Adviser, acting as Agent, assisted by P . A . M . Ferrari, with an address for service in Luxembourg at the office of G . Kremlis, a member of the Commission' s Legal Department, Jean Monnet Building, Kirchberg,

defendant,

APPLICATION for the suspension of the operation of Article 17 of Commission Decision No 194/88/ECSC of 6 January 1988 extending the system of monitoring and production quotas for certain products of undertakings in the steel industry ( Official Journal 1988, L 25, p . 1 ),

The President of the Court of Justice

of the European Communities

makes the following

Order

Grounds

1 By an application lodged at the Court Registry on 17 March 1988, the Associazione industrie siderurgiche italiane ( hereinafter referred to as "Assider ") brought an action under the second paragraph of Article 33 of the ECSC Treaty for a declaration that Article 17 of Commission Decision No 194/88/ECSC of 6 January 1988 extending the system of monitoring and production quotas for certain products of undertakings in the steel industry ( Official Journal 1988, L 25, p . 1 ), which entered into force on 1 January 1988 for a period of six months, was void .

2 By an application for interim measures lodged at the Court Registry on 30 March 1988, the applicant sought, pursuant to the second paragraph of Article 39 of the ECSC Treaty and to Article 83 of the Rules of Procedure, the suspension of the operation of Article 17 of Decision No 194/88/ECSC, until such time as the Court had given judgment on the main action .

3 The defendant submitted its written observations on 22 April 1988 . The parties presented oral argument on 25 April 1988 .

4 Before considering the merits of this application for interim measures, it would be helpful to describe briefly the conversion mechanism set up by Article 17 of Decision No 194/88/ECSC and the origin of that mechanism .

5 Article 17 reproduces in identical terms Article 1 of Commission Decision No 1433/87/ECSC of 20 May 1987 on converting a proportion of the production quotas into quotas for delivery in the common market ( Official Journal 1987, L 136, p . 37 ), with the exception of the average I:P ratio of all the undertakings, which is set at a lower figure than that appearing in Decision No 1433/87/ECSC .

6 Article 17 authorizes undertakings to convert, each quarter, for a category of products to be decided by them, a portion of the difference between their production quota derived from their reference production and the proportion of the quota which may be delivered in the common market derived from their reference quantity into quotas for delivery in the common market at the rate of 1:0.85 . This portion is restricted respectively to 30, 15 or 5% depending on whether the ratio of reference quantities to reference production for all products subject to the quota system is respectively more than 15 percentage points below the average for all undertakings and product categories, more than 5 percentage points below that average or, finally, better than the last-mentioned figure . This average is set at 73 %.

7 That provision does not however include any reference to the restrictions laid down in Article 2 of Decision No 1433/87/ECSC, according to which undertakings resorting to the conversion option provided for in Article 1 are excluded from the benefit of the application of Articles 11 ( 4 ) and 14 ( B ) of Commission Decision No 3485/85/ECSC of 27 November 1985 on the extension of the system of monitoring and production quotas for certain products of undertakings in the steel industry ( Official Journal, L 340, p . 5 ).

8 The Commission considered that a radical change had occurred on the iron and steel market within the meaning of Article 18 ( 1 ) of Commission Decision No 3485/85/ECSC and had accordingly found it necessary to adopt Decision No 1433/87/ECSC, whose period of application was set, with retroactive effect, from 1 January 1987 to 31 December 1987 . The adoption of that decision is justified in its preamble by the observations that exports to non-Community countries had greatly diminished in 1986, that the ratio between costs and export prices had significantly deteriorated, that this situation, which was unlikely to improve appreciably in 1987, affected all undertakings in proportion to the extent to which they were dependent on exports, and that, in addition, the allocation of reference figures for undertakings had been affected several years previously and some of these could, in view of changes in the market, be regarded as out of date .

9 It should be recalled that Decision No 1433/87/ECSC was the subject of an application for suspension of its operation lodged by Assider on 17 July 1987 in connection with Case 223/87 R . The President of the First Chamber, acting for the President of the Court pursuant to the second paragraph of Article 85 and Article 11 of the Rules of Procedure, dismissed this application by an order dated 10 August 1987, on the ground that Assider had failed to prove the existence of damage, even future damage, which was certain and sufficiently serious and irreparable to establish circumstances giving rise to urgency which were required for the grant of a measure suspending the operation of the contested decision ( see the order of the President of the Court of 10 August 1987 Assider v Commission Case 223/87 R (( 1987 )) ECR 3473 ).

10 According to Article 39 of the ECSC Treaty, actions brought before the Court do not have suspensory effect . The Court may, however, if it considers that circumstances so require, order that application of the contested decision or recommendation be suspended and prescribe any other necessary interim measures .

11 In order for an interim measure such as that requested to be granted, Article 83 ( 2 ) of the Rules of Procedure requires that applications should state the factual and legal grounds establishing a prima facie case for the interim measure applied for and the circumstances giving rise to urgency .

12 With a view to establishing a prima facie case for the grant of the suspensory measure in question, the applicant puts forward four submissions which, it maintains, show that Article 17 of Decision No 194/88/ECSC is unlawful and that its adoption is vitiated by misuse of powers inasmuch as it enables the Commission to achieve an aim other than that for which its powers were conferred on it .

13 The applicant maintains in the first place that the Commission disregarded the aim of the conversion mechanism which it had itself set up for the purpose of resolving an export crisis . Since this crisis did not occur or, at least, no longer existed, the Commission had in fact taken action with regard to delivery quotas in order to offset the effect of the out-of-date reference figures allocated to undertakings . It then states that the Commission acted contrary to the essential objective of the quota system, which is to restore the equilibrium between supply and demand in the internal market by authorizing an increase in deliveries in that market . The Commission also infringed the Community principle of non-discrimination by allowing additional deliveries derived from the conversion mechanism set up by Article 17 to be effected for the most part by undertakings which export principally to non-Community countries, so that aid was granted to those undertakings in breach of the Community rules on aid . It claims finally that the Commission infringed the procedure laid down in Article 58 of the ECSC Treaty by adopting the article in question without having obtained the necessary assent from the Council of Ministers .

14 In this connection it should be stressed that Assider' s complaints, which relate in particular to the Commission' s alleged disregard of the procedural and substantive rules laid down in Article 58 of the ECSC Treaty and the essential objective of the quota system and to its violation of the principle of non-discrimination, constitute, as had already been stated in the order of the President of the Court of 10 August 1987, cited above, relevant factual and legal grounds capable of establishing a prima facie case for the grant of the requested suspension of the operation of the decision .

15 Even though it may be thought that in this instance the applicant has shown the factual and legal grounds establishing a prima facie case for the grant of the abovementioned suspensory measure, it still remains for the Court to consider whether there are circumstances giving rise to urgency .

16 The Court has consistently held that the urgency of an application for interim measures, as referred to in Article 83 ( 2 ) of the Rules of Procedure, must be assessed in relation to the necessity for an order granting interim relief in order to prevent serious and irreparable damage to the party requesting the interim measure .

17 In order to establish the urgency of its application for interim relief the applicant maintains that Article 17, of which it complains, causes serious and irreparable damage not only to the undertakings which are members of Assider but also to the internal market .

18 In its view, the damage to the internal market results from the fact that the conversion mechanism set up by Article 17 leads to a substantial increase in supply . This interferes with the equilibrium of the market, which, however, constitutes the essential objective of the quota system . On the basis of its calculations, it claims that in 1987 the impact of all the conversions for products in categories Ia, Ib, II and III was 3.3% of all the delivery quotas in the internal market . Such a serious impact, and one which is moreover likely to increase over the first quarter of 1988, had a negative effect on prices which could be corrected only by an increase in the abatement rates, a measure which would penalize most heavily undertakings whose production was principally directed towards the internal market .

19 Assider argues that Article 17 also adversely affects the relative position of the undertakings which are members of its association which, having ratios of delivery quotas on the common market to production quotas, I:P ratios, above the Community average, could benefit only to a very limited extent from the conversion mechanism set up by that article, unlike undertakings which depended heavily on exports . This loss in terms of their relative positions leads to a reduction of the deliveries which Assider' s members can effect in the common market .

20 It assesses the reduction of its members' deliveries at 3.3% of their usual deliveries and at 2.5% for Finsider, which was able to effect various limited conversions under Article 17 . Citing the example of Finsider, one of the associated undertakings of Assider, it considers that the reduction in its deliveries amounts to approximately 104 000 tonnes for 1987 and stresses that such damage is certain to increase in view of the fact that under Article 17 this mechanism is maintained in force for the first half of 1988 .

21 Such damage is irreparable because the application of the abovementioned conversion mechanism results in an irreversible detrimental alteration of the relative positions of undertakings and, correspondingly, a definitive loss of deliveries within the limits described above, without its being possible, should the decision be declared void, to restore its members to their former situation with regard to their relative position and to compensate for the losses in deliveries, for so long as a quota system is in force and a fortiori in the event of the liberalization of categories Ia and Ib with effect from 1 July 1988 .

22 For its part, the Commission points out that in the event of an excess of supply over demand, it still has at its disposal the instrument of abatement rates to re-establish the equilibrium of the market which, in this case, has not been interfered with by the conversion mechanism maintained in application by Article 17, as is shown by the statistics concerning the changes in abatement rates for deliveries in the Community market and the changes in prices on that market .

23 It takes the view that the only damage which Assider' s members can claim is a loss in terms of their relative positions resulting from an application of Article 17 . That provision, whose period of validity was limited to six months, was intended to readjust equilibrium, to a limited extent, the I:P ratio, which was particularly unfavourable for certain undertakings, and its application necessarily entailed a certain loss of relative position for the undertakings which enjoyed a particularly high I:P ratio, as was the case for the undertakings belonging to Assider . These losses of relative position are however so small, in view of the slight impact of the conversions effected under Article 17 on deliveries, that they may hardly be regarded as giving rise to serious damage . Moreover, they do not exceed the level of sacrifices which the Commission may validly impose on steel undertakings for the sake of solidarity . The Commission adds that in order to determine the seriousness of the damage, it must also be borne in mind that the undertakings on which a reduction in their deliveries on the internal market is imposed receive in exchange compensation on the external market of an equivalent quantity resulting from the reduction in export possibilities for undertakings benefiting from the application of Article 17 .

24 It is to be noted that, at first sight, an analysis of the abatement rates fixed by the Commission for the first two quarters of 1988 confirms the downward tendency observed in most of the quarters of 1987 . Nor, moreover, has there been a collapse of prices within the Community . The applicant has consequently failed to adduce any cogent evidence to show that the equilibrium of the internal market has been disturbed .

25 As regards the negative effect on the relative position of Assider' s members, reference should be made, in order to determine whether the damage sustained was serious, to the case of Finsider, in respect of which the Commission provided, in its observations, statistics for the first quarter of 1988 .

26 It follows from the analysis of these statistics, which were discussed by the parties at the hearing, that the impact of conversions effected under Article 17, which amounted to more or less 3% of all the delivery quotas in the common market, represented for Finsider a loss of relative position for the first quarter of 1988 of 0.398%, its relative position falling from 15.525% to 14.827% for this quarter . This loss of relative position represented for Finsider a reduction of deliveries within the common market of 26 421 tonnes .

27 In the light of those considerations, it must be found that the losses of relative position and the corresponding reductions of deliveries which Assider' s members experienced as a result of the application of Article 17 were substantially under 1 %. Those losses are therefore relatively slight and cannot be regarded as liable to give rise to serious damage for the undertakings in question . That conclusion is all the more inescapable inasmuch as it must be borne in mind that, as the Court has consistently held, measures adopted under Article 58 must make it possible for the whole Community steel industry to defend itself on a collective basis and by an effort of solidarity against the consequences of a crisis arising from a reduction in demand and that provision in no way requires the Commission to guarantee to a specific undertaking, to the detriment of other undertakings of the Commmunity, a minumum production or the maintenance of its relative position on the market ( see the judgment of 7 July 1982 in Case 119/81 Kloeckner-Werke v Commission (( 1982 )) ECR 2627 and the judgment of 11 May 1983 in Case 244/81 Kloeckner-Werke v Commission (( 1983 )) ECR 1451 ).

28 Furthermore, Assider has failed to show that the damage which it relies on is irreparable . If certain categories of products which are at present subject to the quota system were released from it, the undertakings would once again find themselves faced with a free market and subject to competition, so that in principle each of them would have the possibility of increasing its market share, and of compensating in so doing for its previous losses of relative position .

29 It follows from the foregoing that the applicant has failed to show that it would sustain serious and irreparable damage as a result of the application of Article 17 of Decision No 194/88/ECSC and that it has accordingly not succeeded in establishing circumstances giving rise to urgency which would justify the suspension of the operation of that provision .

Operative part

On those grounds,

The President

by way of interim decision,

hereby orders as follows :

( 1 ) The application for interim measures is dismissed .

( 2 ) The costs are reserved .

Luxembourg, 2 May 1988 .