Judgment of the Court of 21 June 1988. - Industrie Siderurgiche Associate (ISA) and others v Commission of the European Communities. - Liberalization of a product from the system of quotas. - Joined cases 32, 52 and 57/87.



European Court reports 1988 Page 03305



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

ECSC - Quota system for production and delivery of steel - Liberalization of certain product categories - Procedure - Procedure laid down for the ending of the system - Recourse had by the Commission to the procedure laid down for the introduction of quotas - Misuse of powers

( ECSC Treaty, Arts 33 and 58 ( 1 ) and ( 3 ); general Decision No 3746/86 )

Summary

Article 58 ( 1 ) of the ECSC Treaty makes the introduction of a quota system, as an exception to the principle of the free market, subject to a stringent procedure whereby the Commission cannot act without the Council' s assent, whereas Article 58 ( 3 ) lays down, for the termination of the quota system and thus the restoration of the free market, a more flexible procedure in the context of which the Commission enjoys more extensive powers, inasmuch as its proposals can only be rejected by a decision to the contrary adopted unanimously by the Council .

As the partial termination of the system of quotas comes within the context of the progressive restoration of normal competitive conditions, it must be regarded as being subject to the procedure laid down by Article 58 ( 3 ). On this account, the Commission misused its powers by availing itself of the procedure laid down in Article 58 ( 1 ) in order to bring about the partial termination of the system of quotas, in respect of which it made a proposal on 2 October 1986, and general Decision No 3746/86 must be declared void, in so far as it relates to the product categories mentioned in the aforesaid proposal .

Parties

In Joined Cases 32, 52 and 57/87

Industrie Siderurgiche Associate - ISA, Milan,

Alfa Acciai Spa, San Polo ( Brescia ),

Fincamuna Spa and Nuova Sidercamuna Spa, concentrated undertakings, Berro Inferiore ( Brescia ),

All represented by Michel Waelbroeck and Alexandre Vandencasteele, both of the Brussels Bar, with an address for service in Luxembourg at the office of Ernest Arendt, 4 avenue Marie-Thérèse,

applicants,

Commission of the European Communities, represented by its Legal Adviser, Rolf Waegenbaur, acting as Agent, with an address for service in Luxembourg at the office of G . Kremlis, Jean Monnet Building, Kirchberg,

defendant,

APPLICATION for a declaration :

In Case 32/87, that Commission Decision No 3746/86/ECSC of 5 December 1986 is void;

In Case 52/87, that Commission Decision SG(86)D/15838 of 23 December 1986, fixing production quotas as regards Alfa Acciai for the first quarter of 1987, is void;

In Case 57/87, that Commission Decision SG(86)D/15853 of 23 December 1986, fixing production quotas in respect of Fincamuna Spa and Nuova Sidercamuna Spa, is void,

THE COURT

composed of : Lord Mackenzie Stuart, President, G . Bosco, J . C . Moitinho de Almeida and G . C . Rodríguez Iglesias ( Presidents of Chambers ), T . Koopmans, U . Everling, Y . Galmot, C . Kakouris and F . Schockweiler, Judges,

Advocate General : C . O . Lenz

Registrar : H . A . Ruehl, Principal Administrator

having regard to the Report for the Hearing and further to the hearing on 3 February 1988,

after hearing the Opinion of the Advocate General delivered at the sitting on 2 March 1988,

gives the following

Judgment

Grounds

1 By an application lodged at the Court Registry on 3 February 1987, ( Case 32/87 ), Industrie Siderurgiche Associate ( hereinafter referred to as "ISA "), an association of steel undertakings, brought an action under Article 33 ( 2 ) of the ECSC Treaty for a declaration that Commission Decision No 3746/86/ECSC of 5 December 1986, amending 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 348, p . 1 ), is void .

2 The contested decision, which was adopted under Article 58 ( 1 ) of the ECSC Treaty, liberalized from the system of quotas, with effect from 1 January 1987, solely category Ic ( galvanized sheet ) and its pre-products, after the Commission had obtained the assent of the Council with regard thereto . The decision did not affect the system of quotas relating to certain products, namely category IV products ( wire rod ), category VI products ( merchant bars ) and the heavy sections coming within category III, which the Commission, in its communication to the Council of 2 October 1986, had proposed, but did not obtain the Council' s assent for, liberalizing on the ground that a situation of manifest crisis no longer existed as regards those products .

3 By applications lodged at the Court Registry on 20 and 25 February 1987 respectively, Alfa Acciai Spa ( Case 52/87 ) on the one hand, and Fincamuna Spa and Nuova Sidercamuna Spa ( Case 57/87 ), undertakings which had become concentrated within the meaning of Article 66 of the ECSC Treaty, on the other, brought :

( i ) in the first case, an action for a declaration that Decision SG(86)D/15838 of 23 December 1986, adopted by the Commission under Article 4 ( 1 ) of Decision No 3485/85, as amended by Decision No 3746/86, and fixing the production and delivery quotas for category IV products allocated to that undertaking for the first quarter of 1987, is void;

( ii ) in the second case, an action for a declaration that Decision SG(86)D/15853 of 23 December 1987, adopted by the Commission under Article 4 ( 1 ) of Decision No 3485/85, as amended by Decision No 3746/86, fixing production and delivery quotas for category VI products allocated to those undertakings for the first quarter of 1987, is void .

4 By an order of 8 May 1987, the Court decided to join the abovementioned cases for the purposes of the procedure and the judgment .

5 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and the submissions and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .

The admissibility of the action brought by ISA

6 The Commission has raised doubts as to the admissibility of the action brought by ISA, contending that the association has to allege a misuse of powers affecting one or more member undertakings and indicate convincingly the reasons, in its view, for the alleged misuse of powers . In this context, the Commission considers that the contested decision does not affect ISA, as it does not manufacture products coming within category Ic, and that the implementation of a different procedure from the one employed would not necessarily have led to a different result, favourable to ISA' s members .

7 In this connection, it should be recalled that, under Article 33 ( 2 ) of the ECSC Treaty, undertakings or associations of undertakings may institute proceedings against general decisions which they consider to involve a misuse of powers against them . In accordance with that provision, for an action to be admissible, it is sufficient for the applicant association formally to allege a misue of powers against it, at the same time indicating the reasons therefor . The Treaty does not lay down or require any additional condition for the admissibility of the action . To establish that the action is well founded, the misuse of powers will have to be proven, but that is a question of substance and does not concern admissibility ( see, in that sense, the judgments of 11 February 1955 in Case 3/54 Assider v High Authority (( 1955 )) ECR 63 and Case 4/54 ISA v High Authority (( 1955 )) ECR 91; the judgment of 16 July 1956 in Case 8/55 Fedechar v High Authority (( 1956 )) ECR 245; the judgment of 29 November 1956 in Case 9/55 Charbonnage; the judgment of 9 June 1964 in Joined Cases 55 to 59 and 61 to 63/63 Modena v High Authority (( 1964 )) ECR 211; the judgment of 8 July 1965 in Joined Cases 3 and 4/64 Sidérurgie française v High Authority (( 1965 )) ECR 443 and, finally, the judgment of 21 February 1984 in Joined Cases 140, 146, 221 and 226/82 Walzstahl-Vereinigung and Thyssen v Commission (( 1984 )) ECR 951 ).

8 In the present case, the applicant claims, with reasons in support, that the Commission committed a misuse of procedure inasmuch as, in adopting the contested decision, it followed the Article 58 ( 1 ) procedure, in disregard of its powers, instead of applying the Article 58 ( 3 ) procedure . The Court has consistently held that misuse of procedure is a category of misuse of powers ( judgment of 13 June 1958 in Case 2/57 Hauts-fourneaux de Chasse v High Authority (( 1958 )) ECR 199, and the Walzstahl judgment, mentioned above ). The applicant has also put forward arguments seeking to show that this misuse of procedure was committed against it by virtue of the fact that the Commission, by not liberalizing the products manufactured by the undertakings which make up ISA, directly injured the latter' s interests .

9 On the basis of the considerations set forth above, the action brought by ISA must be considered to be admissible .

The substance of ISA' s action

10 It should be noted at the outset, as regards the subject-matter of the dispute, that the claim for relief in this action should be construed as seeking a declaration that Decision No 3746/86 is void, not in its entirety, but solely to the extent to which that decision did not liberalize categories IV and VI and the heavy profiles coming within category III . The Commission' s proposal, in its communication to the Council of 2 October 1986, related only to the abovementioned categories together with category Ic . It is thus only in respect of these products that the question arises whether the Commission misused its powers, whereas the validity of the decision is not contested as regards the other product categories . Although ISA, in its conclusions, seeks, without specifying further, a declaration that the contested decision is void, it is clear from the arguments it has put forward in its pleadings and at the hearing that, in reality, it is seeking a declaration that the decision is void only to the extent to which it did not liberalize the product categories mentioned above .

11 ISA claims that the Commission misused its powers by using the procedure provided for in Article 58 ( 1 ) for purposes other than those for which it was intended and by supplanting, with that procedure, the only one applicable in this case, namely the procedure under Article 58 ( 3 ).

12 The Commission maintains, for its part, that in this case it had the choice between paragraph ( 1 ) and paragraph ( 3 ) and the fact that it used the first procedure in no way constitutes a misuse of powers .

13 In order to elucidate that point, which is decisive for the resolution of the dispute, it is necessary to examine the way in which Article 58 regulates the introduction and ending of a system of quotas . Paragraph ( 1 ) of that article provides that :

"In the event of a decline in demand, if the High Authority considers that the Community is confronted with a period of manifest crisis and the means of action provided for in Article 57 are not sufficient to deal with this, it shall, after consulting the Consultative Committee and with the assent of the Council, establish a system of production quotas, accompanied to the necessary extent by the measures provided for in Article 74 ."

Under the terms of paragraph ( 3 ) of that article :

"The system of quotas shall be ended on a proposal being made to the Council by the High Authority after consulting the Consultative Committee, or by the government of a Member State, unless the Council decides otherwise, acting unanimously if the proposal emanates from the High Authority or by a simple majority if the proposal emanates from a government . An announcement on the ending of the quota system shall be made by the High Authority ."

14 In the Commission' s view, the expression "ending of the quota system", which appears in Article 58 ( 3 ), cannot be interpreted in any other way than as referring to the termination of the quota system as a whole . From this it infers that the case of a partial termination of the quota system is not governed by that provision and that it therefore retains the choice of using either paragraph ( 3 ) or paragraph ( 1 ), by virtue of the application of the actus contrarius principle .

15 It should be observed at the outset that, as Article 58 ( 1 ) does not provide that the quota system necessarily applies to all the products of the steel industry, that provision is similarly applicable in a case where such a system is intended to be applied first of all to certain categories of products and to be extended subsequently to other categories . In the same way, it cannot be excluded that Article 58 ( 3 ) also applies in a case where the quota system is only ended in respect of some of the products which are covered by it .

16 In order to ascertain whether this procedure ought to have been followed by the Commission as regards its proposal of 2 October 1986, it should be pointed out that Article 58 ( 1 ) makes the introduction of a quota system, as an exception to the principle of the free market, subject to a stringent procedure under which the High Authority cannot act without the Council' s assent, whereas Article 58 ( 3 ) lays down, for the termination of the quota system and the restoration of the free market, a more flexible procedure in the context of which the High Authority enjoys more extensive powers, inasmuch as its proposals can be rejected only by a decision to the contrary adopted unanimously by the Council .

17 The powers thus conferred on the High Authority to bring the quota system to an end and thus to restore the free market are justified by the role which that institution is required to play in the context of the implementation of the ECSC Treaty, Article 8 of which assigns to it the task of ensuring the attainment of the Treaty' s objectives, amongst which Article 5 mentions the establishment, maintenance and observance of normal competitive conditions between Community undertakings .

18 It follows that, as the partial termination of the system of quotas, proposed by the Commission on 2 October 1986, came within the context of the progressive restoration of normal competitive conditions, it should have been regarded as being subject to the procedure laid down by Article 58 ( 3 ).

19 It follows from the foregoing that the Commission was wrong to use the procedure laid down in paragraph ( 1 ) instead of that provided for in paragraph ( 3 ) and thereby misused its powers . That misuse of powers affected ISA' s steel-producing undertakings whose products were exposed to the risk, which later materialized, of being excluded from any liberalizing measure, by reason of the fact that the Commission chose to have recourse to the procedure contained in paragraph ( 1 ).

20 In these circumstances, Commission Decision No 3746/86/ECSC of 5 December 1986 should be declared void in so far as it relates to the product categories which formed the subject-matter of the liberalizing proposal made by the Commission to the Council on 2 October 1986 .

The actions brought by Alfa Acciai Spa and by Fincamuna Spa and Sidercamuna Spa

21 As regards the actions brought by Alfa Acciai Spa, by Fincamuna Spa and by Sidercamuna Spa, the applicants request that the individual decisions fixing, in respect of them, production quotas for the first quarter of 1987 be declared void, as they were adopted in pursuance of a provision contained in an invalid general decision, namely Article 4 ( 1 ) of Decision No 3485/85, as amended by Decision No 3746/86 .

22 The declaration that Decision No 3746/86 is void in part has the effect of reviving the applicability, within the limits of that declaration, of Article 4 ( 1 ) of Decision No 3485/85, as it existed prior to the amendments made to it by Article 1 of the annulled decision, unless and until a new decision is adopted by the Commission, modifying the situation with effect from 1 January 1987 .

23 It is clear from the wording of Article 4 ( 1 ) of Decision No 3485/85, in its original version, that this provision brings under the quota system all the product categories to which the individual decisions challenged by the applicants relate . The individual decisions therefore prove to be based on a provision whose validity is not, at present, called in question .

24 In those circumstances, the actions are unfounded and must therefore be dismissed .

Decision on costs

Costs

25 Under Article 69 ( 2 ) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs .

26 Since the Commission has failed in its submissions in Case 32/87, it must be ordered to pay the costs in that case .

27 Since Alfa Acciai Spa, on the one hand, and Fincamuna Spa and Sidercamuna Spa on the other, have failed in their submissions, they must be ordered to pay the costs in Cases 52/87 and 57/87 respectively .

Operative part

On those grounds,

THE COURT

hereby :

( 1 ) Declares Commission Decision No 3746/86 of 5 December 1986 void in so far as it concerns the product categories which were included in the proposal for liberalization made by the Commission to the Council on 2 October 1986;

( 2 ) Dismisses as unfounded the applications in Cases 52/87 and 57/87;

( 3 ) Orders the Commission to pay the costs in Case 32/87;

( 4 ) Orders Alfa Acciai Spa, the applicant in Case 52/87, and Fincamuna Spa and Sidercamuna Spa, the applicants in Case 57/87, to pay the costs .