Opinion of Mr Advocate General Lenz delivered on 28 April 1989. - Hoogovens Groep BV v Commission of the European Communities. - ECSC - Adjustment of delivery quotas. - Case 219/87.



European Court reports 1989 Page 01717



Opinion of the Advocate-General

++++

Mr President,

Members of the Court,

A - Facts

1 . In this fresh dispute between the Hoogovens Groep BV, the applicant, and the Commission of the European Communities, the defendant, the point at issue is whether the defendant was entitled to abolish with retroactive effect the restrictions on the possibility of transferring certain production references under the system of steel quotas .

2 . By 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 to the steel industry, ( 1 ) the Commission extended the validity of the quota system from 1 January 1986 to 31 December 1987, albeit in respect of a smaller number of products than under the previous rules .

3 . Pursuant to Article 15(1 ) of the aforesaid decision, the Commission may, at the request of an undertaking, authorize transfers of references within the two groups of categories of products listed below subject to certain conditions :

( i ) Ia, Ib, Ic, II and III ( Group 1 );

( ii ) III, IV and VI(Group 2 ).

4 . According to Article 15(2 ), the Commission may authorize exchanges, sales or transfers of all or part of reference production or quantities if the plants corresponding to the reference figures to be transferred were permanently closed or sold and transferred to a third country after 1 January 1980 . It may also do so within the framework of restructuring plans which it has approved .

5 . According to Article 15(3 ), in the case of permanent closure or of sale and transfer of a plant to a third country after 1 January 1980, the Commission may authorize the undertaking to transfer, subject to certain conditions, the reference figures corresponding to that plant within the two groups of categories of products set out in Article 15(1 ).

6 . By Decision No 3524/86/ECSC of 19 November 1986, ( 2 ) amending Decision No 3485/85/ECSC and based on Article 18 thereof, the Commission noted that products in Category Ic were no longer to be subject to the quota system with effect from 1 January 1987 and that it was necessary to avoid disruption of the steel market brought about by artificial inflation of the references of products remaining subject to quota as a result of transfers of references of products soon to be liberalized and limited with immediate effect the application of Article 15(2 ) and ( 3 ) of Decision No 3485/85 to products in Categories Ia, Ib, II, III, IV and VI . Accordingly, references of products in Category Ic could no longer be transferred pursuant to Article 15(2 ) and ( 3 ) with immediate effect .

7 . As a result of that decision, the defendant authorized a transfer requested prior to 19 November 1986 but refused two later requests . The two decisions refusing those requests were challenged by the undertakings concerned before the Court . ( 3 )

8 . The Commission reconsidered the problems at issue here in the light of the applications in Cases 13/87 and 25/87 . It found that a reconsideration of the available data lent support to the conclusion that the repercussions of possible reference transfers were not of such a serious nature as to justify a measure excluding the products in Category Ic from the field of application of Article 15(2 ) and ( 3 ) of Decision No 3485/85 . Accordingly, by Decision No 1434/87/ECSC of 20 May 1987, ( 4 ) the Commission repealed Decision No 3524/86 with effect from 19 November 1986 .

9 . The applicant is challenging Decision No 1434/87 on the grounds of a misuse of powers affecting it . In its view, the defendant wrongfully failed to incorporate in the decision rules to restore the applicant' s relative position on the market to an equitable level . In any event, it failed to adopt rules which could have prevented a further deterioration in the applicant' s relative position . The applicant maintains that the mere fact that its relative position on the market has seriously deteriorated and will further deteriorate as a result of the contested decision necessarily implies that the defendant has exercised its powers for a purpose other than that for which they were conferred upon it .

10 . The applicant therefore claims that Decision No 1434/87 should be declared void in its entirety or at least in part .

11 . The defendant contends that the applicant should be dismissed as inadmissible or, in the alternative, as unfounded .

12 . It maintains that the application is directed against the repeal of an exception to the general rule introduced by Decision No 3485/85 . However, the applicant has not contested that general decision . The objection of illegality which the applicant relied on in Cases 226/86 and 285/86 ( 5 ) against Decision No 3485/85 was based on the ground that that general decision did not permit any adjustment to be made to quotas for delivery in the common market and not on the ground that the decision adversely affected the applicant' s relative position on the market .

13 . In this context the defendant considers itself obliged to ensure a balanced relationship between undertakings but not to afford absolute protection to their relative position on the market . Furthermore, the liberalization of Category Ic and the possibility of effecting transfers has not led to substantial shifts in references .

14 . I shall consider the parties' other submissions, in so far as is necessary, in the following section of my Opinion . For the rest, I would refer to the Report for the Hearing .

B - Analysis

I - Admissibility of the application

15 . According to the wording of the application, the subject-matter of these proceedings is Decision No 1434/87 . In so far as that decision contains an independent rule - the repeal of Decision No 3524/86 - the application is admissible . That is not affected by the fact that the contested decision merely restored the legal position which had existed on the basis of Decision No 3485/85, in so far as is relevant here . After all, the adoption of Decision No 3524/86 was intended to take account of the fact that Decision No 3746/86/ECSC ( 6 ) excluded the galvanized sheet sector ( Category Ic ) from the quota system .

16 . Although, according to its wording, Decision No 1434/87 re-established the rules formerly applying under Decision No 3485/85, it must be stated that Article 15(2 ) and ( 3 ) are thereby given a change in meaning, in so far as it is possible henceforth to transfer references of a liberalized category of products . Decision No 1434/87 therefore constitutes a measure which, in substantive terms, is partially new .

17 . None the less, it is necessary to take account of the defendant' s contention concerning the admissibility of the application in so far as the basic transfer possibility provided for by Article 15(2 ) and ( 3 ) of Decision No 3485/85 can no longer be called in question . In Cases 226/86 and 285/86 the applicant had asked the Court to "declare Decision No 3485/85 unlawful in its entirety, or at least in part ". In its judgment of 14 July 1988 in Joined Cases 33, 44, 110, 226 and 285/86, the Court interpreted that claim as meaning in substance that general Decision No 3485/85, and in particular Article 5 thereof, should be declared unlawful . The Court upheld that claim, since it declared Article 5 void in so far as it does not allow the Commission to establish delivery quotas on a basis which it considers equitable for undertakings in which the ratio between production quotas and delivery quotas is substantially lower than the Community average . The applicant did not object to that interpretation of the application by the Court . In any event, the applicant did not apply to the Court to supplement its judgment pursuant to Article 67 of the Rules of Procedure and it is clear, therefore, that a comprehensive decision has been taken on its claims with regard to Decision No 3485/85 .

18 . Since, therefore, only Article 5 of Decision No 3485/85 but not Article 15(2 ) and ( 3 ) thereof have been contested by the applicant, and since Article 19 of that decision states that before the end of 1986 the Commission intends to ask the Council, after consulting the Consultative Committee, for its assent to the exclusion of other categories from the quota system as from 1 January 1987, the applicant' s contention can be considered only in so far as it concerns the alleged deterioration of its relative position on the market as a result of the adoption of Decision No 1434/87 . However, in so far as the alleged deterioration of its position is attributed by the applicant to the basic rule in Decision No 3485/85, it cannot be considered in these proceedings .

19 . The only issue still to be examined, therefore, is whether the adoption of Decision No 1434/87 constitutes a misuse of powers affecting the applicant .

II - Substance

20 . To begin with, it must again be pointed out that both Decision No 3524/86 and Decision No 1434/87, repealing the former, are based on Article 18 of Decision No 3485/85, which empowers the Commission to carry out the necessary adjustments if radical changes occur on the iron and steel market or if the application of Decision No 3485/85 encounters any unforeseen difficulties .

21 . It is apparent from the very wording of Article 18 of Decision No 3485/85 that the defendant enjoys a broad discretion or power of appraisal in this area .

22 . Although, as part of Decision No 3485/85, Article 18 is indeed to be read inter alia in the light of Article 58(2 ) of the ECSC Treaty which requires the Commission in the context of a quota system to determine quotas on an equitable basis, Article 18 should not be regarded as the actual instrument for setting equitable quotas . Quotas are to be fixed equitably on the basis of Article 5 of the decision, even though they may be altered in certain respects on the basis of the articles which follow that provision .

23 . Article 18, on the other hand, is designed to deal with radical changes occurring on the iron and steel market or to overcome any unforeseen difficulties . It is a provision for resolving problems which had not yet been foreseen when Decision No 3485/85 was adopted . However, that provision cannot in any way be relied upon in order to remedy possible injustices resulting from the quota system as a whole .

24 . Against that background, one can but concur with the defendant' s contention that Article 18 is designed to resolve short-term problems but not to remedy structural problems arising on the iron and steel market .

25 . In November 1986, after it became known that products in Category Ic would no longer be subject to the quota system as from 1 January 1987, the defendant feared the possibility of disruption of the steel market brought about by artificial inflation of the references of products remaining subject to quota as a result of transfers of references of products soon to be liberalized . The defendant therefore saw fit to exclude the possibility of transfers from Category Ic . On the assumption that the defendant' s fears were based on facts or serious forecasts, it was entitled to rely on Article 18 of Decision No 3485/85 for the adoption of that measure .

26 . When it became apparent as a result of a change in the economic climate that the defendant' s fears were unjustified, the defendant was, in my view, not only entitled, but even obliged to repeal Decision No 3524/86, as it did by adopting Decision No 1434/87 . Since it had reached the conclusion that the repercussions of possible reference transfers were not of such a serious nature as to justify the exclusion of products in Category Ic from the field of application of Article 15(2 ) and ( 3 ) of Decision No 3485/85, the defendant was obliged to take such action because the factual prerequisites for the application of Article 18 were no longer fulfilled . The factual prerequisites and the legal basis for Decision No 3524/86 had ceased to exist, since the economic situation had developed otherwise than in the manner which the defendant had initially anticipated .

27 . The defendant has also sought to justify its approach by reference to the principle of equal treatment and the principle of legal certainty .

28 . It is true that, towards the end of 1985, when the defendant adopted Decision No 3485/85 of 27 November 1985 excluding Category V ( reinforcing bars ) and Category Id ( other coated flat products ) from the quota system with effect from 1 January 1986, the corresponding transfer possibilities provided for in Article 15(2 ) and ( 3 ) of Decision No 234/84/ECSC ( 7 ) had not been either restricted or excluded . Therefore, in the event of a further liberalization of the quota system, traders could expect the defendant to adopt a similar approach, as is also borne out by the applications in Cases 13/87 and 25/87, referred to earlier .

29 . Nor can any objection be raised against the retention of the transfer possibilities provided for by Article 15(2 ) and ( 3 ) of Decision No 3485/85, since those possibilities are connected with the permanent closure of plants or their transfer to a third country, or with the implementation of a restructuring plan approved by the Commission . Undertakings availing themselves of the transfer possibilities provided for by that provision have, therefore, already made a contribution to the reorganization of the steel market, for which some return can be given within the framework of Article 15(2 ) and ( 3 ) subject to the requirements specified therein .

30 . The initial conclusion can therefore be drawn that the defendant has exercised the discretion conferred upon it by Article 18 of Decision No 3485/85 for the purpose of combating cyclical problems in the manner contemplated by that provision . The repeal of Decision No 3524/86 by Decision No 1434/87 is precisely a proper exercise of the defendant' s discretion since the Commission thereby repealed a decision for which the requirements laid down by Article 18 were not fulfilled .

31 . Accordingly, since there has been no misuse of powers, it is necessary to consider only incidentally the point that there certainly cannot have been a misuse of powers affecting the applicant .

32 . The measures adopted under Article 58 of the ECSC Treaty are intended to enable the Community' s steel industry as a whole to overcome, on a collective basis and by a cooperative effort, the consequences of crises occurring when demand declines . According to the case-law of the Court, however, that provision in no way places the Commission under a duty to guarantee to any given undertaking, to the detriment of others within the Community, minimum production ( 8 ) or maintenance of its relative position on the market . ( 9 ) As no such obligation exists on the basis of either Article 58 of the ECSC Treaty or the fundamental provision of Decision No 3485/85 ( Article 5 ), it certainly cannot arise in connection with the special provision for cyclical problems in Article 18 of Decision No 3485/85 .

33 . Nor, for that reason, is it any longer necessary to consider the divergent figures submitted by the parties in connection with the applicant' s loss of its relative position on the market . In part, those figures are not comparable since some are estimates whilst others are actual figures . Moreover, the data concerning the deterioration of the applicant' s relative position on the market are confined ( except for products in Category Ib ) within a range of between 0.5% and 1.5%, which is by no means unacceptable even if the defendant were held to be under an obligation to guarantee the applicant' s relative position on the market .

C - Conclusion

34 . In the light of the foregoing considerations, I suggest that the Court :

( 1 ) dismiss the application;

( 2 ) order the applicant to pay the costs .

(*) Original language : German .

( 1)1 Official Journal 1985, L 340, p . 5 .

( 2 ) Official Journal 1986, L 325, p . 35 .

( 3 ) Case 13/87 Thyssen Stahl AG v Commission of the European Communities and Case 257/87 Hoesch AG v Commission of the European Communities, both of which were removed from the register by orders of the Court of 30 September 1987 .

( 4 ) Commission Decision No 1434/87/ECSC of 20 May 1987 repealing Decision No 3524/86/ECSC amending Decision No 3485/85/ECSC on the extension of the system of monitoring and production quotas for certain products of undertakings in the steel industry ( OJ 1987, L 136, p . 39 ).

( 5 ) Judgment of 14 July 1988 in Joined Cases 33, 44, 110, 226 and 285/86 Stahlwerke Peine -- Salzgitter AG and Hoogovens BV v Commission of the European Communities (( 1988 )) ECR 4309 .

( 6 ) Commission Decision No 3746/86/ECSC of 5 December 1986 amending Decision No 3485/85/ECSC on the extension of the system of monitoring and production quotas for certain products of undertakings in the steel industry ( OJ 1986, L 348, p . 1 ).

( 7 ) Commission 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 ( OJ 1984, L 29, p . 1 ).

( 8 ) See the judgments of 7 July 1982 in Case 119/81 Kloeckner-Werke AG v Commission of the European Communities (( 1982 )) ECR 2627, at p . 2650, and of 11 May 1983 in Case 244/81 Kloeckner-Werke AG v Commission of the European Communities (( 1983 )) ECR 1451, at p . 1482 .

( 9 ) See the Orders of the President of the Court of Justice of 10 August 1987 in Case 209/87 R EISA v Commission of the European Communities (( 1987 *) ECR 3453, and of 2 May 1988 in Case 92/88 R Assider v Commission of the European Communities (( 1988 )) ECR 2425 .