Opinion of Mr Advocate General Vilaça delivered on 4 February 1987. - Fabrique de fer de Charleroi SA and Dillinger Hüttenwerke AG v Commission of the European Communities. - ECSC - Additional quotas. - Joined cases 351 and 360/85.



European Court reports 1987 Page 03639



Opinion of the Advocate-General

++++

Mr President,

Members of the Court,

1 . Two steel undertakings - one Belgian, Fabrique de fer de Charleroi SA, and the other German, Dillinger Huettenwerke AG - seek the annulment of Commission Decision No 2760/85/ECSC of 30 September 1985, ( 1 ) which inserted Article 14*D in Decision No 234/84/ECSC of 31 January 1984 on the extension of the system of monitoring and production quotas for certain products of undertakings in the steel industry . ( 2 )

2 . Article 14*D provides as follows : "The Commission may grant additional supplementary quotas up to a maximum of 25*000 tonnes per quarter to an undertaking :

3 . ( i ) which is the sole undertaking in the country in which it is situated;

4 . ( ii ) which is confronted with exceptional difficulties, even after receiving a quota supplement under the provisions of Article 14;

5 . ( iii ) which has not received aids under the provisions of Decision No 1018/85/ECSC ."

A - Subject-matter of the application

6 . In their replies, both of the applicants ask the Court to treat their applications as directed equally against Article 14*C of Commission Decision No 3485/85/ECSC of 27 November 1985 ( 3 ) which extended the system of monitoring and production quotas for a further two years . Article 14*C corresponds to Article 14*D of Decision No 2760/85/ECSC, except for the third condition of Article 14*D which was repealed .

7 . According to the applicants, the Commission has merely maintained or confirmed the system established by the former Article 14*D, whilst mitigating the conditions for its application in a manner which is likely to create even more serious distortions of competition to the detriment of traders who are discriminated against, in so far as it no longer excludes the allocation of a supplementary quota where the undertaking concerned has received aid, two factors that were previously regarded as incompatible .

8 . According to Fabrique de fer de Charleroi, in the light of Article 58 ( 3 ) of the ECSC Treaty, no genuine "extension" of the system of production quotas is involved, but only an amendment of that system .

9 . The Commission objects to the applicants' request, which it regards as an extension of the subject-matter of the proceedings that may involve consideration of the categories of aid permitted under the new Article 14*C and consequently of the extent of the fresh distortions of competition resulting from that provision .

10 . For my part, I am in favour of accepting the applicants' request .

11 . Although it relates to an individual decision, I believe that the precedent established by the judgment in Alpha Steel ( 4 ) constitutes an expression of the general principles of the proper administration of justice and of the rationalization of the proceedings, which are also applicable in this case . It would be contrary to those principles to oblige the applicants to make a fresh application against a provision which, adopted in the course of the proceedings, replaced the provision previously in force, whilst maintaining in substance the same system and entailing merely an adjustment or a strengthening of the arguments put forward initially .

B - The contested decisions viewed in connection with the quota system

12 . In view of the crisis in the steel industry, which became acute from 1975 onwards, the Commission took action, at first indirectly, to combat the effects of structural overcapacity of production . Accordingly, between July 1977 and June 1980 delivery programmes were established which the undertakings were requested to apply . However, that indirect action proved to be inadequate and, for that reason, the Commission adopted Decision No 2794/80/ECSC of 31 October 1980, pursuant to Articles 47 and 58 of the ECSC Treaty, which established a system of production quotas as from 31 October 1980 . The quota system has been extended and amended on several occasions, in particular by Decision No 234/84/ECSC and, more recently, by Decision No 3485/85/ECSC .

13 . Article 14 of Decision No 234/84/ECSC, subsequently amended by Decisions No 1243/85/ECSC and No 2760/85/ECSC, was adopted with a view to permitting supplements to the production quota, and to that part of the quota which may be delivered in the Common Market, to be granted when undertakings experience exceptional difficulties due to the level of the quarterly abatement rate set for certain categories of products . Article 14 itself laid down the criteria for fixing supplements of that kind .

14 . However, the Commission has taken the view, on a number of occasions, that those criteria do not permit account to be taken in all cases of the specific circumstances of undertakings affected by the quota system so as to enable them to overcome the exceptional difficulties resulting therefrom or, in any event, to achieve more successfully the objectives of that system in specific cases which may arise . That is why a number of additions were subsequently made to Article 14 of Decision No 234/84/ECSC, including Article 14*D which laid down the new criteria permitting, under the conditions established by that provision, the grant of a quota supplement over and above the additional quota . As we know, Decision No 3485/85/ECSC repealed one of the conditions laid down by Article 14*D for the grant of a supplementary quota .

C - Nature of the contested decisions and admissibility of the applications

15 . ( a)*Neither Decision No 2760/85/ECSC nor Decision No 3485/85/ECSC is directed at addressees who are identifiable and individually distinguished, both decisions being couched instead in general and abstract terms .

16 . However, the applicants maintain - in particular the applicant in Case 360/85 - that both of those decisions conceal - as regards Article 14*D, and subsequently Article 14*C - a true individual decision designed to promote a Danish undertaking, Det Danske Stalvalsevaerk ( DDS ), which, in their view, is the only undertaking able to benefit from the machinery embodied in that provision .

17 . Under the system established by the ECSC Treaty, the conditions for the admissibility of applications for annulment lodged by legal persons against Commission decisions - which differ from the conditions of admissibility laid down by the second paragraph of Article 173 of the EEC Treaty - vary according to whether the decisions challenged are general decisions or individual decisions .

18 . As is well known, only undertakings and associations may submit applications of that kind .

19 . However, they may challenge only individual decisions ( and recommendations ) concerning them or general decisions ( and recommendations ) which they consider to involve a misuse of powers affecting them ( second paragraph of Article 33 of the ECSC Treaty ).

20 . The Court has already clarified the conditions in which those requirements may be regarded as satisfied .

21 . So far as individual decisions are concerned, they need not be addressed to the applicant; it is sufficient if, though addressed to another person, they affect the interests of the applicant (" concerning them ") in such a way as to enable him to show that he has a real interest in the annulment of the decision, without necessarily being the only or virtually the only person affected . ( 5 )

22 . So far as general decisions are concerned, two conditions of admissibility are laid down by the second paragraph of Article 33 of the ECSC Treaty .

23 . In the first place, it is necessary - but also sufficient - for the applicants to claim formally that there has been a misuse of powers and to rely on cogent grounds in support of that claim which will have to be established only when the substance of the case is considered . ( 6 )

24 . Secondly, the misuse of powers must affect the applicants . In my view, the Court' s interpretation of that requirement is sufficiently broad : there does not have to be a "false" general decision which deliberately conceals an individual decision and applications against general decisions in the true sense are admissible where the applicant is the subject or at any rate the victim of the misuse of powers alleged . ( 7 )

25 . The Court' s recent judgments in Joined Cases 140, 146, 221 and 226/82 ( 8 ) and in Case 250/83, ( 9 ) in which the applications were held to be admissible, would seem to show that the requirement in question has not been interpreted restrictively .

26 . The distinction between an individual decision and a general decision is made, according to the Court, ( 10 ) on the basis not of the form but of the content and the scope of the measure . That is a distinction which, the Court has held, is important not only in order to determine the conditions of admissibility of an application but also to define the range of arguments which the applicants are entitled to put forward in support of their claim .

27 . In this case, both of the applicants contend that the contested decisions involve a misuse of powers . In their view, by providing for the grant of a supplementary quota over and above the additional quota to undertakings which satisfy the conditions of Article 14*D ( subsequently Article 14*C ), the Commission sought not to achieve the objectives of the ECSC Treaty, specifically the protection of the common market in steel during a crisis, but rather to grant a quota supplement to the Danish steel undertaking DDS .

28 . The Commission therefore attempted, according to the applicants, to resolve a particular case under cover of a decision couched in general and abstract terms .

29 . Proof of this is said to lie in the fact that DDS is the only undertaking in a position to benefit from the allocation of the supplementary quota provided for in Article 14*D/C . There are other Member States of the Community which have only one steel undertaking, but none of those undertakings fulfils the other necessary requirements . The countries concerned are Ireland, cited by Fabrique de fer de Charleroi, and the Netherlands and Luxembourg, cited by Dillinger Huettenwerke . Ireland' s steel undertaking does not manufacture products subject to the quota system whilst the Netherlands' steel undertaking and Luxembourg' s steel undertaking have not obtained quota increases under Article 14 of Decision No 234/84/ECSC .

30 . The Commission challenges the applicants' allegations on that point . Ireland' s steel undertaking manufactures products that are subject to the quota system and the possibility cannot be ruled out in theory that the Netherlands' steel undertaking may experience exceptional difficulties . The Commission does not include Luxembourg amongst the three countries with only one steel undertaking .

31 . However, the applicants' argument is supported by the reference to the Council' s communication of 25 July 1985 which states that the Council has given its assent to the Commission' s proposal for a decision amending Decision No 234/84/ECSC on the quota system "for the benefit of Denmark' s only steel producer ".

32 . According to the applicants, even if the measure in question is regarded not as a disguised individual decision but as a general decision, the provisions under consideration are still vitiated by a misuse of powers .

33 . The applicants maintain that, in substance, by referring to an undertaking "which is the sole steel undertaking in the country in which it is situated" for the purposes of guaranteeing "supply as far as steel products are concerned", the Commission confers on a Member State the right to ensure that it is supplied by a domestic undertaking, contrary to the fundamental principles and objectives of the ECSC Treaty and the basic rules of the quota system . In an attempt to ensure the survival of an undertaking by the allocation of supplementary means and in order to enable it to overcome exceptional difficulties, ( 11 ) the decisions in question pursue an aim which is incompatible with the objective laid down in Article 2 of the ECSC Treaty, namely to secure "the most rational distribution of production at the highest possible level of productivity ". At the same time, those decisions infringe the rules which require that sacrifices should be shared out equally amongst all the undertakings in the Community, regardless of their nationality or their geographical location .

34 . Ultimately, in seeking to ensure that a domestic market is supplied by the only undertaking established on it, the contested decisions contribute, according to the applicants, to the disintegration of the common market, which is manifestly contrary to the fundamental principles governing that market .

35 . ( b)*My opinion on the preliminary issue now under consideration is as follows :

36 . Articles 14 D and 14*C were added to, or incorporated in, decisions whose provisions are essentially of a legislative nature and are worded in such a way as to be capable of being applied to all undertakings which fulfil or may come to fulfil, at present or in the future, the objective conditions which they lay down .

37 . However, there is a small but significant set of circumstances which brings the contested decisions "dangerously" close to being in the nature of individual decisions adopted in order to resolve the case of the Danish undertaking DDS .

38 . Decision No 2760/85/ECSC was adopted at the end of September 1985 with a view to taking effect as from 1 July ( one quarter ), but at a time when its period of validity had only three months still to run .

39 . It was quite clear that, as regards the first quarter, only DDS would benefit from the decision and it was in the light of the interests of that undertaking that the Council gave its assent to the proposal for a decision, as if the latter were applicable to DDS alone .

40 . As regards the second quarter, the Commission itself acknowledges, in its defence, that it was to be foreseen that no other undertaking would fulfil the conditions laid down by Article 14*D during the fourth quarter of 1985 .

41 . This means that throughout its short period of validity, namely two quarters, it was well known or it was anticipated that only DDS would be able to benefit from Decision No 2760/85/ECSC, and that is what happened in practice .

42 . If that was the case, the decision which replaced it in respect of the subsequent period must also be vitiated by the same defect .

43 . That fact is so closely connected with the substance of the case that, if considered decisive, it would entail the annulment of the decisions in question on account of a misuse of powers .

44 . However, the Court has already emphasized, on various occasions, ( 12 ) that "the nature of a measure as a regulation is not called in question by the possibility of determining more or less precisely the number or even the identity of the persons to whom it applies at a given moment as long as it is established that it is applied by virtue of an objective legal or factual situation defined by the measure in relation to the objective of the latter ".

45 . Quite frequently, it is specific situations which give rise to the adoption of measures of a general nature and which become the focus of the discussions which lead to the adoption of those measures .

46 . If the view is taken that those measures in fact constitute general decisions in the true sense, as the Commission maintains, that should not preclude them from being challengeable on the basis of a misuse of powers, as provided for by the second paragraph of Article 33 of the ECSC Treaty, where they have not been adopted for a lawful purpose .

47 . From that point of view, I consider that the applicants have relied on cogent, or plausible, grounds in support of their allegation that the contested decisions involve a misuse of powers and therefore satisfy one of the requirements laid down by the second paragraph of Article 33 for an application to be admissible .

48 . The requirement that there must be a misuse of powers concerning them remains to be considered .

49 . The applicant in Case 351/85 claims to be in direct competition with DDS, the sole beneficiary of the contested decisions, since it produces the steel falling within Category II in respect of which the majority of the quotas allocated to DDS were granted .

50 . Even though there is no doubt that only a portion of the production quota may be sold in the Common Market, there are two possible approaches : either the Commission can reduce the abatement rates when calculating the production quotas allocated to steel undertakings as a whole, or, instead, in order to prevent a negative impact on prices, it can take action by fixing higher abatement rates so as to reduce the overall output of the Community' s steel industry .

51 . In the first case, as the applicant maintains, the increase in the total tonnage to be allocated amongst the undertakings does not preclude its being necessary, pursuant to the contested decision, to deduct 25*000 tonnes from that total, which are reserved to DDS .

52 . In the second case, even if the Commission wished to take action by means of the abatement rates in order to offset the fall in prices, all the other undertakings, including the applicant, would have to bear the consequences of more serious cuts in production .

53 . For its part, the applicant in Case 360/85 also claims that its position on the market places it in direct competition with DDS, with the result that its sales possibilities are directly and substantially affected by the grant of a special quota to that undertaking .

54 . In 1984, according to the applicant, DDS' s production amounted to approximately 460*000 tonnes, of which 310*000 tonnes - that is to say approximately two-thirds of the total - consisted of reversing-mill plates ( falling within Category II ), which made up virtually the whole of the applicant' s production .

55 . Similarly, the applicant maintains, 71.4% of the additional quota obtained by DDS under Article 14 of Decision No 234/84/ECSC is also made up of reversing-mill plates falling within Category II .

56 . Since, out of a total production of 310*000 tonnes of reversing-mill plates, approximately 257*000 tonnes were exported in 1984, it is permissible, according to the applicant, to start from the premise that the supplementary quantity of 100*000 tonnes per year from which DDS ultimately benefited was sold largely in other Member States of the Community .

57 . The applicant concludes that, as a result, employment and marketing opportunities for competing undertakings are reduced .

58 . The applicant also maintains that this fact is particularly striking if the specific features of the quota system are borne in mind .

59 . Dillinger Huettenwerke maintains that the Commission fixes the abatement rates for production on the basis of the volume of demand, and attempts to adjust the level of supply accordingly . In order to ensure that the grant of additional quotas to undertakings confronted with "exceptional difficulties", within the meaning of Article 14, does not upset the market balance, Article 9a of Decision No 234/84/ECSC ( and Article 9 of Decision No 3485/85/ECSC ) provides for the creation of a reserve not exceeding 3% of overall steel demand, which is to be set up each quarter at the time when the abatement rates are set .

60 . According to the applicant, who has not been contradicted on this point by the Commission, Article 9 does not apply to the supplementary quantity of 100*000 tonnes which thus inevitably exceeds the existing volume of demand .

61 . That leads to adverse repercussions on the system of prices, which has an unfavourable impact on the position of the applicant, a direct competitor of DDS, particularly on the German market .

62 . Those consequences are all the more unfortunate as the coefficient relating to the utilization of the applicant' s production capacity for Category II was - the applicant maintains - only 26.4% in 1984, as against 51.2% in the case of DDS, and it must be borne in mind that, with the allocation of the supplementary quota, that rate could exceed 60% in the case of DDS, as against 26% in the case of the applicant .

63 . Notwithstanding the circumstances alleged by the applicants, it is doubtful whether they satisfy in this case the requirement laid down at the end of the second paragraph of Article 33 of the ECSC Treaty . ( 13 )

64 . Moreover, the applicants argued their case by reference to the relationship between their own position and the particular circumstances of DDS, as if an individual decision had been addressed to DDS .

65 . In my view, however, it is possible to come to an affirmative conclusion, in the light of the more recent case-law of the Court which is cited above ( see footnotes 7, 8 and 9 ).

66 . In the first place, the reference to the specific situation created by the allocation of supplementary quotas to DDS constitutes a good illustration of the manner in which the general decisions, allegedly vitiated by a misuse of powers, may affect the applicants . It is the application of those decisions that reveals the adverse effects they may have .

67 . Secondly, even if the view is taken that the contested measures were not adopted with the intention of or with a view to affecting the applicants individually, the fact remains that the applicants were the ultimate "victims" of those measures or were affected by them, in a situation which is common only to certain steel undertakings, namely those which are in competition with the beneficiary of the contested provisions in relation to the categories of products in respect of which the supplementary quotas were granted .

68 . Support for the conclusion that the applications are admissible is to be found in the English and Portuguese ( 14 ) versions of the ECSC Treaty which, in my view, are particularly eloquent inasmuch as the terms used at the end of the second paragraph of Article 33 are "affecting them" and "que as afecte" respectively, corresponding to the French expression "à leur égard" and the Italian expression "in loro riguardo ".

69 . Since the conditions laid down in the second paragraph of Article 33 for an application to be admissible may thus be regarded as satisfied, I now turn to the substance of the case .

D - Substance

70 . ( a)*A misuse of powers arises where there is a divergence between the aim pursued by the legislature in conferring on a body or institution the powers needed for the adoption of a measure and the aim pursued by that body or institution in adopting the measure ( subjective misuse of powers ), or between the lawful aim of the measure and the result objectively achieved by the inexcusably negligent exercise of the powers conferred ( objective misuse of powers ). ( 15 )

71 . In either case, any examination of a misuse of powers is invariably based on a teleological rationale and on the conflicting relationship between the measure adopted and the purpose assigned to it or the purpose which it is objectively intended to serve .

72 . It is that relationship between the means and the end that I propose to examine below .

73 . ( b)*In the first place, it is necessary to identify clearly the contested measure which is alleged to be vitiated by a misuse of powers .

74 . It is clear that the measures challenged by the applicants are Commission Decisions No 2760/85/ECSC and No 3485/85/ECSC ( Article 14*C ) and not just any individual measure implementing those decisions which allocates supplementary quotas to a particular undertaking .

75 . That is how the subject-matter of the action was defined by the applicants in their respective applications, and the arguments concerning the reasons on which those individual measures are based are therefore not valid except in so far as they may contribute towards the examination of the question whether the contested decisions involve a misuse of powers .

76 . ( c)*Those decisions were adopted in the exercise of the powers conferred on the Commission by the ECSC Treaty, in particular Article 58 thereof .

77 . The wording of that provision does not reveal clearly and unequivocally the entire range of objectives pursued by the authors of the Treaty in making provision for recourse to the quota system .

78 . However, certain specific indications may be derived from its wording . Further, the reference to "the principles set out in Articles 2, 3 and 4" constitutes a fundamental guideline . Finally, the Court has specified in its case-law which objectives of the quota system must find expression in the rules applicable thereto .

79 . Some of the objectives pursued by Article 58 of the ECSC Treaty are clearly apparent from its wording . A system of production quotas is established where the indirect means of action are not sufficient to overcome "a period of manifest crisis" resulting from "a decline in demand" ( Article 58 ( 1 )*). The quotas are determined "on an equitable basis, taking account of the principles set out in Articles 2, 3 and 4" and, in particular, of the concern "to maintain employment" in undertakings "whose rate of production has fallen below that envisaged" ( Article 58 ( 2 )*).

80 . It is immediately apparent from those provisions that they contain a set of general criteria and objectives which are inherent in the quota system, and the harmonization of which cannot always be a simple matter .

81 . However, in referring to "the principles set out in Articles 2, 3 and 4", Article 58 itself is meant to establish that the quota system must safeguard or take into account the major objectives of the ECSC Treaty .

82 . That is summarized in Article 2 which provides that "through the establishment of a common market" and having regard to the ultimate or long-term objective of "economic expansion", "growth of employment" and "a rising standard of living", the European Coal and Steel Community "shall progressively bring about conditions which will of themselves ensure the most rational distribution of production at the highest possible level of productivity, while safeguarding continuity of employment and taking care not to provoke fundamental and persistent disturbances in the economies of Member States ".

83 . Article 3 sets out in detail those objectives and the action which is designed to contribute to their attainment . Article 4 clarifies the requirements of the common market in coal and steel .

84 . The aforesaid provisions also contain a series of disparate aims which, as the Court emphasized in its judgment in Kloeckner, ( 16 ) "must constantly be reconciled with one another depending on the economic circumstances and therefore priority may not be given to one of those aims to the detriment of the others ".

85 . In practice, in the event of a conflict arising between those aims viewed individually, priority will have to be accorded to one or other of them as would appear to be required, according to the Commission, by "the economic facts and circumstances in the light of which the Commission adopted its decision ". ( 17 )

86 . Particularly acute problems of reconciling different objectives arise when the Community institutions have to apply the principles in question during a serious crisis and accordingly set in motion the machinery provided for in Article 58 . ( 18 )

87 . By establishing the system of production quotas and by adopting the general rules applicable thereto, the Community institutions "legalized the crisis" in order to safeguard the objectives of the ECSC Treaty as far as possible .

88 . Similarly, the Court has already defined on a number of occasions the specific objectives of that "legalized crisis ".

89 . As the Court stated in Kloeckner, ( 19 ) restrictive measures adopted in order to "improve market conditions" must "enable the profitability of undertakings to be maintained or restored in the long term and thereby enable the jobs which depend on it to be preserved as far as possible ". The Court went on to state that Article 58 "does not in any way require the Commission to guarantee each individual undertaking a minimum level of production determined in accordance with the undertaking' s own criteria of profitability and development . The aim of Article 58 is to spread in the most equitable manner possible amongst all undertakings the reductions required by the economic situation and not to guarantee undertakings a minimum level of employment proportionate to their capacity ". ( 20 )

90 . In the grounds of its judgment in Finsider, ( 21 ) the Court provides further clarification by stating that both Decision No 2177/83/ECSC extending the quota system, which was in force at the time, and Decision No 2320/81/ECSC establishing Community rules for aids to the steel industry, pursued "a common aim, namely to promote the restructuring needed to adapt production and capacity to foreseeable demand and to re-establish the competitiveness of the European steel industry ".

91 . The terms in which that objective is couched are still valid in the light of the measures which followed Decision No 2177/83/ECSC, namely Decisions No 234/84/ECSC and No 3485/85/ECSC .

92 . Clearly, market trends with regard to iron and steel products called for adjustments to be made to the rules in force .

93 . However, Decision No 234/84/ECSC was adopted in connection with the "persistence of the manifest crisis", which made it advisable, according to the Commission, "that the present system should be maintained without substantial amendments ". According to the preamble to that decision, the capacity utilization rate was still extremely low and "the substantial overcapacity of production facilities remains a heavy burden on the whole of the industry ". Worldwide, there was still the same marked imbalance between supply and demand and the market remained depressed .

94 . The situation had even deteriorated to such an extent over the second half of 1983 that "the Commission was forced to take further restrictive measures in order to reinforce the discipline of the undertakings ".

95 . As for Decision No 3485/85/ECSC, it was clear from the preamble thereto that the situation on the Community steel market had improved appreciably since the start of 1984, both in terms of production and as regards the financial position of the steel undertakings .

96 . It had thus been possible to reduce overcapacity while, at the same time, the steel industry pressed ahead with plant modernization to boost its competitiveness . At the same time, there was found to be a lasting increase in the level of steel prices but, on the other hand, as a result of previous restructuring, further job losses had occurred .

97 . However, the world market was still suffering from an imbalance between supply and demand, aggravated by import restrictions imposed by the United States of America and by the uncertainty resulting from sharp fluctuations in the dollar exchange rate .

98 . For that reason, the Commission' s forecasts were based on the need to shed a further 20*million tonnes or so of hot-rolling capacity, and it was essential for modernization schemes and increased competitiveness to be pursued .

99 . The meaning of this, according to the Commission, is that although a substantial part of the task of restructuring had been accomplished, there was still no certainty of success nor was the crisis over .

100 . The possibility already existed of excluding certain products ( in Categories I(d ) and V ) from the quota system, with a view to reverting to the operation of normal market forces .

101 . However, there were persistent difficulties with regard to the other products, including reversing-mill plates falling within Category II .

102 . In those circumstances, although the long-term objective remains the progressive abolition of the quota system, it proved necessary to extend that system which, as the Commission stated, "by and large ... simply extends the existing rules ".

103 . ( d)*That is the overall context in which the Commission adopted first Decision No 2760/85/ECSC of 30 September 1985 containing a new Article 14*D, and subsequently an amended version of that article ( Article 14*C ) as part of Decision No 3485/85/ECSC of 27 November 1985 .

104 . The reasons for the adoption of that measure are set out in the preamble to Decision No 2760/85/ECSC .

105 . It follows from a systematic consideration of those reasons that Decision No 2760/85/ECSC was adopted on the basis of the following objectives :

106 . ( i ) to remedy the "specific circumstances" of undertakings which are experiencing "exceptional difficulties", even after receiving additional quotas;

107 . ( ii ) more specifically, in order "to guarantee its existence" in the case of an undertaking which is a Member State' s sole steel producer, having regard to the need to safeguard that "country' s supply of steel products", which, "even in a common market, must depend to a large extent on this undertaking ".

108 . In the light of those objectives, the provisions in question make it possible to grant an additional quota increase of up to a maximum of 25*000 tonnes per quarter to the undertaking concerned .

109 . I acknowledge that, at first sight, it is not easy to detect, in the statement of the reasons on which those decisions were based, any trace of the actual objectives of the quota system, as I have described them, and in relation to which Article 58 of the ECSC Treaty confers upon the Commission the powers it needs to take action .

110 . It cannot have been either the restructuring process or the increased competitiveness of the undertaking(s ) concerned which led to the adoption of the measure in question, but the need to safeguard the undertaking' s existence by guaranteeing it a "minimum level of employment" to ensure its survival .

111 . In that respect, since the contested provisions confer entitlement to a supplementary quota regardless of its effects on the competitiveness of the undertaking concerned and solely with a view to ensuring the latter' s survival, they seem to run counter to the aim of promoting restructuring, unless their purpose is to discourage it .

112 . Hence it cannot be said, at least for the time being, that the reason for the adoption of the measures in question is the concern to promote "the most rational distribution of production at the highest possible level of productivity" ( Article 2 of the ECSC Treaty ). The rational distribution of production depends, in the first place, on the distribution of the factors of production, on their productivity and on the prices charged, and secondly on the location of the markets, which, in principle, has nothing to do with the mere fact that an undertaking is a country' s ( or a region' s ) sole steel producer .

113 . It is questionable, therefore, whether a measure of that kind is in accord with the fundamental principles of the Common Market, as laid down in Article 3 ( a ) and ( b ) of the ECSC Treaty, in so far as it bases the allocation of a further supplementary quota essentially on the guarantee that a State' s domestic market will be supplied by an undertaking situated in that State . In a true common market, the guarantee of supplies for a market should be transposed from the national to the Community level .

114 . In that regard, the Commission draws a parallel with the judgment in Campus Oil ( 22 ) which the applicants do not regard as wholly relevant .

115 . That case was concerned with a question which had been raised in connection with the application of a national measure restricting imports of petroleum products, which the Court regarded as justifiable on grounds of public security under Article 36 of the EEC Treaty .

116 . The applicants emphasize that in this case the institutional context is different as is, moreover, the factual context . The supply of petroleum products depends largely on products imported from other parts of the world, which are generally politically unstable, whereas the steel industry is a sector with a structural overcapacity of production in the Community . In their view, the problem is particularly sensitive for a country like Ireland, which, in view of its position, was directly involved in Campus Oil .

117 . In addition, the applicants maintain that, so far as petroleum products are concerned, no really effective means are available at Community level to deal with a crisis, whereas the ECSC Treaty has set up a common system of supply management in the event of a crisis .

118 . However, we shall see in due course that the reference to Campus Oil is not entirely devoid of interest .

119 . Nor does the Commission attempt to justify the decisions under consideration, which refer exclusively to reasons connected with supply, by reference to the adjustment of production and capacity to demand, and fluctuations therein probably carried no weight with regard to their adoption .

120 . The decisions in question may even contribute towards a ( no doubt marginally ) greater imbalance, inasmuch as the supplementary quotas are additional to the total quota allocated to Community undertakings .

121 . Furthermore, those measures are apparently unconnected with the objective of spreading as equitably as possible amongst all the undertakings the sacrifices required by the economic situation and they create, as the applicants allege, a further distortion on the market for the benefit of an undertaking or a category of undertakings and to the detriment of its competitors .

122 . Hence the effect of the contested decisions, albeit to the limited extent of the quantities provided for therein, is to redistribute production and consequently to alter the position of undertakings on the market as between each other . ( 23 )

123 . We shall see in due course that the "equitable clauses" which apply in connection with the operation of a crisis management system are capable of neutralizing the force of that argument .

124 . In any event, an assessment of the foregoing considerations would appear to point to the existence of a misuse of powers in the main or decisive part of the statement of the reasons on which the contested measures are based . ( 24 )

125 . ( e)*However, allow me to proceed a little further along that path .

126 . Let me state at once that, whether expressly or by implication, the applicants rely on a breach of the principle of non-discrimination in support of their claims .

127 . In particular, as a result of the allocation of supplementary quotas, the recipient thereof is accorded, the applicants contend, more favourable treatment than its competitors, without there being any objective justification for it .

128 . Not only does it obtain a supplementary quota in circumstances which preclude any other undertaking being eligible for it, but also the quota is allocated after the undertaking has already benefited from quota increases pursuant to Article 14 of the relevant decisions .

129 . In that regard, Fabrique de fer de Charleroi illustrates its contention by comparing the development of its own production of sheet with the development of DDS' s production and by reference to the growth of employment in the Danish steel industry .

130 . At the same time, notwithstanding the fact that the measure concerned is based on the need to guarantee supplies for the domestic market, DDS benefits to a large extent, according to the applicants, from the export opportunities available within the Common Market .

131 . In support of their contention, the applicants rely on the figures for DDS' s exports to the Common Market, which, moreover, affect a sector of production that is particularly tense .

132 . The Court has already held ( 25 ) that "for the Commission to be accused of discrimination, it must be shown to have treated like cases differently, thereby subjecting some to disadvantages as opposed to others, without such differentiation being justified by the existence of substantial objective differences ".

133 . However, the Court ( 26 ) requires those objective and substantial differences to be connected with the "aims which the Commission may lawfully pursue as part of its industrial policy in the European steel industry ".

134 . Earlier I stated that doubts in that regard may be justified .

135 . However, are the decisions at issue not based on any other ground which is capable of making their legality incontestable?

136 . ( f)*That may be the case with regard to the maintenance of employment ( Articles 2 and 58 ( 2 ) of the ECSC Treaty ), which might be threatened if an undertaking confronted with exceptional difficulties were to become insolvent .

137 . In that regard, the Danish Government, which has intervened in the proceedings in support of the Commission' s conclusions, explained the position of DDS and the risks to which the labour market and the social situation in Denmark might be exposed by the failure to allocate a supplementary quota to that undertaking .

138 . However, the Court has already pointed out* 16 that the maintenance as far as possible of employment in the sector concerned is connected with the improvement in market conditions in the long term and the purpose of Article 58 is not to guarantee each individual undertaking a minimum level of production .

139 . Similarly, the Court emphasized 16 that the reference in Article 58 ( 2 ) to the "maintenance of employment" is made in relation to a regulatory mechanism to which the Commission did not resort, any more than it has done so in this case .

140 . However, this case is concerned with safeguarding employment not in just any undertaking but in a country' s sole steel undertaking .

141 . Does that not count as an important factor amongst the reasons justifying the allocation of supplementary quotas?

142 . I have already acknowledged that that factor may give rise to certain doubts in the light of the principles on which a common market is based .

143 . However, it also features in the Aids Code ( 27 ) where, in the matter of financial aid to the steel industry, particular importance is attached to the situation of a Member State with only one steel undertaking ( Article 2 ( 3 )*).

144 . Any reference to that analogy should, however, be made with reservations . The Aids Code states only that the Commission is to take account of that special situation in assessing applications for aid, without making it a decisive condition .

145 . Moreover, that fact is significant only in relation to applications for aid submitted "pursuant to restructuring programmes" and where the impact of the undertaking on the Community market is "minimal ".

146 . However, there is another fundamental principle which, according to the Court, also governs the policy for combating the crisis in the steel sector, namely the principle of solidarity . ( 28 )

147 . That is the principle which enables quota supplements to be granted, pursuant to Article 14 of the decisions on the quota system, to undertakings confronted with exceptional difficulties .

148 . As we know, the persistence of exceptional difficulties, even after a quota increase has been granted pursuant to Article 14, is another of the conditions laid down in the contested decisions .

149 . As the Commission emphasizes in its replies, Article 14*D/C, in conjunction with Article 14, is based on grounds of fairness, inasmuch as it seeks to mitigate the excessive rigidity of the quota system .

150 . As the Court has already stated, ( 29 ) the usefulness and value of such provisions are undeniable .

151 . They must be applied in connection with objective criteria for defining those exceptional difficulties, as is the case of Article 14 itself, since, where the crisis is widespread, all the steel undertakings are affected to a greater or lesser extent . ( 30 )

152 . According to the contested decisions, the specific nature of the situation in which the undertakings concerned find themselves in relation to all the undertakings that fall within the scope of Article 14 ( and thus obtain additional quotas under the conditions laid down therein ), and which justifies the allocation to them - and to them alone - of a further supplementary quota on account of their exceptional difficulties, stems from a single criterion, namely that of being the sole steel undertaking of the country in which they are situated .

153 . It is possible to ask, as the applicants do, whether that criterion is based on a reasonable application of the principle of solidarity .

154 . In the light of that principle, Dillinger Huettenwerke emphasizes, there is no justification, for instance, for discriminating against undertakings that are in the same situation and which are the only ones established in large regions of the Community whose frontiers do not coincide with those of a Member State .

155 . Safeguarding fundamental balances in the economies of the Member States is undoubtedly one of the objectives pursued by Article 2 of the ECSC Treaty, where it refers to the need to prevent "fundamental and persistent disturbances" in those economies .

156 . It was in order to meet such concerns - which are not directly at issue in these proceedings - that the Commission incorporated, in the decisions now under consideration, Article 16 which is applicable to Greece and Ireland .

157 . ( g)*At this stage of my analysis, I have the impression that we are dealing with a borderline case in which it is possible to raise the question whether or not the Commission has exceeded the tolerance threshold in the exercise of its discretion .

158 . As is well known, the Court has considered allegations of a misuse of powers to be well founded only in very few cases . ( 31 )

159 . I am also fully aware of the doubts raised by this case and of the need to weigh the arguments put forward .

160 . But I cannot avoid the conclusion that, if the contested decisions were to be regarded as individual decisions, they would have to be annulled on account of a misuse of powers .

161 . In the light of the foregoing considerations, however, I am of the opinion that the measures in question are general decisions in the true sense .

162 . The Danish Government refers to the judgment in Metallurgiki Halyps, ( 32 ) in which the Court acknowledges that, in the exercise of its discretion, the Commission may take into account considerations of economic policy connected with differences in structure, level of development and rate of utilization of production capacity existing between the undertakings of a given Member State ( in that case Greece ) and those of other States .

163 . Admittedly, the Court emphasized in the same judgment that "the consequences of that crisis affect all undertakings, whatever their geographical location and their individual state of development" and that existing problems were not peculiar to Greek undertakings but also arose "for many other undertakings throughout the Community ". ( 33 )

164 . However, the Court referred to the application of general provisions in force - which entail sharing the necessary sacrifices in an equitable manner - and not to the adoption of a new set of rules for special cases that might justify such action .

165 . For that reason, the Court held that "the introduction and adjustment of the special relief clause in favour of Greek undertakings falls within the Commission' s discretion on matters of policy ". ( 34 )

166 . The Danish Government has examined at some length, on the basis not of the present state of the market but of the need to have at its disposal at all times the means to combat the eventuality of a serious crisis, the problems of security of supply which may arise in a Member State where it has only one steel undertaking on its territory and that undertaking is in difficulty .

167 . Accordingly, the insolvency of the undertaking in question at a time when abnormal circumstances are widespread, and which it might be possible to prevent by the allocation of a supplementary quota, is quite capable of producing serious consequences for the stability of the country and the functioning of its economy .

168 . In that respect the analogy drawn with the judgment in Campus Oil is justified; in that case, the Court stated that the restrictive measures under consideration were justifiable, in the interest of public security, in order to guarantee "a minimum supply of petroleum products to the State concerned in the event of a supply crisis" ( 35 ) by ensuring "that its plant will be available in the event of a crisis ". ( 36 )

169 . In the event of a serious crisis, the functioning of the common market in steel could be interrupted or seriously jeopardized and it is on the basis of such eventualities that the concern of the Member States to ensure secure supplies of iron and steel products, which are crucial to the functioning of a large number of sectors, must be assessed .

170 . Accordingly, the availability of a "strategic shuttlecock" which they can operate in those circumstances normally forms part of their industrial and defence policy objectives, with the result that it is possible to detect a convergence between those objectives and the aims shared by all the Member States of the European Coal and Steel Community .

171 . Even if an undertaking' s technical possibilities and the demands of the field in which it is specialized do not permit it to manufacture in normal circumstances the entire range of products needed in order to supply the State in which it is situated, the adjustments and reconversion of which it is capable during a crisis may be such as to make that "shuttlecock" effective, particularly in cases where the undertaking can use raw materials found locally .

172 . Provision for a future emergency of that kind can be made only in the present, by preventing the closure of a country' s sole steel undertaking which may be faced with the threat of serious difficulties on the market .

173 . Even in the absence of a serious crisis, a significant change in the economic situation is capable of affecting market conditions to such an extent as to bring those considerations into play .

174 . In those circumstances, and given the present structure of the Community, it may not make sense to withhold from the Community institutions the power to adopt general measures to meet those concerns .

175 . The quota system has functioned as a net in which the mesh was tightened in order to close the gaps revealed by the crisis and created by the system itself . Article 14, as supplemented, acts as a safety net or as an equitable clause which makes it possible to mitigate the rigidity of the system .

176 . However, if the functioning of those provisions and the exercise of the powers which they confer are not to exceed the bounds of what is permissible under the general rules in force, they must operate under conditions which are limited and proportionate to the goal pursued .

177 . It has not been established that this was not the case here . Supplementary quotas may not exceed 25*000 tonnes per quarter, the quantity deemed necessary to ensure the survival of an undertaking .

178 . Moreover, there was never any intention of reserving a market to a single undertaking by granting it exclusive or preferential rights . Provision was made only for the grant of a quota supplement and the market was left open . Hence that condition differs from the one which was criticized in the 1985 Finsider judgment . ( 37 )

179 . In any event, we are dealing with exceptional rules adopted during a crisis in response to exceptional circumstances . It would be another thing to argue that, under normal market conditions, the continued support of the public authorities in order to ensure the survival of an undertaking is justified .

180 . For those reasons, I believe that the Commission acted within the bounds of what is still acceptable in the difficult exercise of its discretion in the circumstances of the case .

Conclusion

181 . I have already expressed the view that the applications must be regarded as admissible in so far as they challenge both Decision No 2760/85/ECSC and Article 14*C of Decision No 3585/85/ECSC .

182 . To classify those decisions as individual decisions would, in my view, entail their annulment on account of a misuse of powers .

183 . However, I incline to the view that they constitute general decisions and accordingly propose that the Court dismiss the applications as unfounded .

184 . In the light of that conclusion, the applicants should be ordered to bear the costs in accordance with Article 69 ( 2 ) of the Rules of Procedure .

(*) Translated from the Portuguese .

( 1 ) Official Journal 1985, L*260, p.*7 .

( 2 ) Official Journal 1984, L*29, p.*1 .

( 3 ) Official Journal 1985, L*340, p.*5 .

( 4 ) Judgment of 3 March 1982 in Case 14/81 Alpha Steel v Commission (( 1982 )) ECR 749, at p.*763, paragraph 8 of the decision .

( 5 ) Judgment of 23 April 1956 in Joined Cases 7 and 9/54 Groupement des industries sidérurgiques luxembourgeoises v High Authority (( 1954-56 )) ECR 175, at p.*192; judgment of 15 July 1960 in Joined Cases 24 and 34/58 Chambre syndicale de la sidérurgie de l' Est de la France v High Authority (( 1960 )) ECR 281, at p.*292; judgment of 23 February 1961 in Case 30/59 De Gezamenlijke Steenkolenmijnen in Limburg v High Authority (( 1961 )), ECR 1, at pp.*16 and 17 .

( 6 ) Judgment of 11 February 1955 in Case 3/54 Assider v High Authority (( 1954-56 )) ECR 63, at p.*69; judgment of 16 July 1956 in Case 8/55 Fédération charbonnière de Belgique ( Fédéchar ) v High Authority (( 1954-56))ECR 245, at p.*257 .

( 7 ) Fédéchar, supra, at p.*257; however, for a somewhat more restrictive formulation, see the judgment of 9 June 1964 in Joined Cases 55 to 59 and 61 to 63/63 Ferriere di Modena and Others v High Authority (( 1964 )) ECR 211, at p.*228 .

( 8 ) Judgment of 21 February 1984 Walzstahl-Vereinigung and Thyssen v Commission (( 1984 )) ECR 951, at pp.*982 to 984 .

( 9 ) Judgment of 15 January 1983 in Case 250/83 Finsider v Commission (( 1981 )) ECR 131, at pp.*150 and 151 .

( 10 ) Judgments referred to in footnote 7, supra, at pp . 256, 227 and 228 respectively .

( 11 ) See the preamble to Decision No 2760/85/ECSC .

( 12 ) Judgment of 11 July 1968 in Case 6/68 Zuckerfabrik Watenstedt v Council (( 1968 )) ECR 409, at p.*415; judgment of 5 May 1977 in Case 101/76 Koninklijke Scholten Honig v Council and Commission (( 1977 )) ECR 797, at p.*808; judgment of 17 June 1980 in Joined Cases 789 and 790/79 Calpak v Commission (( 1980 )) ECR 1949, at p.*1959 .

( 13 ) See the Opinion of Mr Advocate General Lenz in Finsider (( 1985 )) ECR 132, at p.*137 .

( 14 ) Diaro da República, Series I, No 215, 2nd Supplement, 18 September 1985 .

( 15 ) Reference to those two conceptions of a misuse of powers are to be found in the case-law of the Court . See, for the first ( traditional ) meaning, the judgment of 12 June 1958 in Case 2/57 Hauts fourneaux de Chasse v High Authority (( 1958 )) ECR 119, at p.*207; see also the judgment of 18 March 1980 in Joined Cases 154, 205, 206, 226 to 228, 263 and 264/78, 39, 31, 83 and 85/79 Valsabbia v Commission (( 1980 )) ECR 907, at p.*1020, paragraph 130 of the decision . For misuse of powers in the objective sense see, for instance, Fédéchar (( 1954-56 )) ECR 292, at pp.*302 and 303 .

( 16 ) Judgment of 7 July 1982 in Case 119/81 Kloeckner-Werke v Commission (( 1982 )) ECR 2627, at p.*2650 .

( 17 ) See the Valsabbia judgment, supra, ECR 907, at p.*1002; see also the judgment of 13 June 1958 in Case 9/56 Meroni v High Authority (( 1957-58 )) ECR 133, at pp.*151 and 152; judgment of 21 June 1958 in Case 8/57 Groupement des hauts fourneaux et aciéries belges v High Authority (( 1957-58 )) ECR 245, at pp.*253 and 254 .

( 18 ) See Valsabbia, supra, at p.*1003 .

( 19 ) Case 119/81 (( 1982 )) ECR 2627, at p.*2650, paragraph 13 of the decision .

( 20 ) See also the judgment of 20 June 1985 in Case 64/84 Queenborough Rolling Mill v Commission (( 1985 )) ECR 1829, at p.*1847, paragraph 11 of the decision .

( 21 ) Judgment of 15 January 1985 in Case 250/83 Finsider v Commission (( 1985 )) ECR 131, at p.*152 .

( 22 ) Judgment of 10 July 1984 in Case 72/83 Campus Oil Limited v Minister for Industry and Energy (( 1984 )) ECR 2727 et seq .

( 23 ) See, for instance, the judgment of 19 September 1985 in Joined Cases 63 and 147/84 Finsider v Commission (( 1985 )) ECR 2857, at p.*2873, paragraph 31 of the decision .

( 24 ) See Hauts fourneaux de Chasse, supra, at p.*209, and judgment of 21 June 1958 in Case 13/57 Eisen - und Stahlindustrie v High Authority (( 1957-58 )) ECR 265 .

( 25 ) See Finsider, supra, at p.*152; see also the judgment of 13 July 1962 in Joined Cases 17 and 20/61 Kloeckner-Werke v High Authority (( 1962 )) ECR 325, at p.*345 .

( 26 ) See Finsider, supra, at p . 152, paragraph 8 of the decision .

( 27 ) Commission Decision No 2320/81/ECSC of 7 August 1981 ( Official Journal 1981, L*228, p.*14 ).

( 28 ) See, for example, the judgment in Valsabbia, supra, at p.*909 .

( 29 ) See the judgment in Alpha Steel, supra, at p.*767 .

( 30 ) See the judgment of 11 May 1983 in Joined Cases 303 and 312/81 Kloeckner v Commission (( 1983 )) ECR 1507, at pp . 1524 and 1525 .

( 31 ) See the judgment of 5 May 1966 in Joined Cases 18 and 35/65 Gutmann v Commission (( 1966 )) ECR 103, at p . 118; judgment of 29 September 1976 in Case 105/75 Giuffrida v Council (( 1976 )) ECR 1395, at p . 1403; judgment of 6 March 1979 in Case 92/78 Simmenthal v Commission (( 1979 )) ECR 777, at p . 811; judgment of 21 February 1984 in Joined Cases 140, 146, 221 and 226/82 Walzstahl-Vereinigung v Commission (( 1984 )) ECR 951, at p.*986 .

( 32 ) Judgment of 15 December 1983 in Joined Cases 31, 138 and 204/82 Metallurgiki Halyps v Commission (( 1983 )) ECR 4193, at pp . 4208 and 4209 .

( 33 ) See, to the same effect, the judgment of 20 June 1985 in Queenborough Rolling Mill, supra, paragraph 11 of the decision .

( 34 ) See Metallurgiki Halyps, supra, at p.*4211 .

( 35 ) See Campus Oil, supra, at p.*2754 .

( 36 ) Idem, at p.*2755 .

( 37 ) See Finsider, supra, paragraph 32 of the decision .