Commission Decision No 194/88/ECSC of 6 January 1988 extending the system of monitoring and production quotas for certain products of undertakings in the steel industry
Date: 1988-01-06
Institutions: European Commission
Subjects: market supervision, production quota













EUR-Lex - 31988S0194 - EN






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31988S0194

Commission Decision No 194/88/ECSC of 6 January 1988 extending the system of monitoring and production quotas for certain products of undertakings in the steel industry  


Official Journal L 025 , 29/01/1988 P. 0001 





*****COMMISSION  DECISION No 194/88/ECSC  of 6 January 1988  extending the system of monitoring and production quotas for certain products of undertakings in the steel industry  THE COMMISSION OF THE EUROPEAN COMMUNITIES,  Having regard to the Treaty establishing the European Coal and Steel Community, and in particular Article 47 and 58 thereof,  Whereas:  1. The change in the market situation for certain categories of steel products  The steel quota system, which has been in force since 1 October 1980 pursuant to Article 58 of the ECSC Treaty, has enabled the Community steel industry to restructure gradually.  The situation has improved to the extent that it has been possible for coated sheets in categories Ic and Id to be taken out of the quota system. Production techniques for wire rod (category IV), and merchant bars (category VI), just as for reinforcing bars (category V), which have already been liberalized, are developing rapidly, with increasing use of the electric arc route. Keeping these products within the quota system could hinder this development. Most of the producers concerned with these products are not in a state of crisis. They should therefore be excluded from the quota system.  The structural changes which have taken place in the steel industry over the last few years also make it unnecessary to maintain within the quota-system pre-material in categories Ia and Ib intended for re-rolling or processing by other Community undertakings, especially since the monitoring system still applies to such products.  Despite the fact that the Commission can still see over-capacity in wide strip mills, the situation on hot-rolled coil (category Ia) and cold-rolled sheet (category Ib) is generally thought to be satisfactory under current trading conditions. Nevertheless, an immediate return to market rules could result in prices falling too sharply. It therefore seems appropriate to keep them in the quota system for a further two quarters, but with a relaxation in quotas in the second quarter, in preparation for liberalization after 30 June 1988, which the Commission considers necessary under current market conditions.  The market for products in categories II (reversing mill plates) and III (heavy sections), despite a certain improvement, continues to be very depressed and there is still significant over-capacity in relation to the production of each of these categories.  2. Special case of small undertakings (Article 4)  The main producers of steel products in categories Ia, Ib, II and III have always been the large integrated undertakings. However, there are a number of small producers of the products in question. Their production is marginal and often specialized: it has little impact on the market. It therefore seems appropriate to exclude such undertakings from the quota system by increasing the total production reference below which an undertaking is excluded from the system.  However, to prevent undertakings outside the quota system from producing and delivering quantities large enough to disrupt the market, the production threshold above which an undertaking will once again be subject to the quota system must be fixed at a sufficiently low level.  3. 'Mono producers' (Article 6)  Production by some undertakings is restricted to or heavily concentrated within a single product category, and this makes such undertakings particularly sensitive to the effects of the quota system. In particular, they have not been able to benefit from changes in references arising from exchanges, transfers and adjustments authorized by the Commission. Where their relative position has deteriorated as a result of changes made to the references of other undertakings pursuant to Commission Decision No 3485/85/ECSC (1), it should be restored to the level at which it stood during the first quarter of 1986.  4. Bankrupt or insolvent undertakings (Article 8)  Where an undertaking is bankrupt, being wound up or subject to similar proceedings, and its production activities are being carried on by, for example, the receiver or liquidator or whoever is taking the company over, but without the necessary restructuring taking place, the company has the advantage of being relieved of all or some of its liabilities, yet the market situation is not being improved by any closure of production plant which had, presumably, been operating at a loss. By making it possible to reduce the undertaking's references, the proposed legislation seeks to offer an incentive for the undertakings to be restructured, which is in the interest of the European steel industry, but also, properly interpreted, in the interest of the undertaking itself,  HAS ADOPTED THIS DECISION:  I. Monitoring system  Article 1  A system for monitoring production and deliveries of certain products of categories I, II, III, IV, V, VI and certain sub-categories of category I is hereby established. These categories, which include all qualities and choices of steel, are:  1.2 // - category I:   // hot-rolled wide and narrow strip rolled on specialized mills;   // - category II:   // reversing mill plate and wide flats;   // - category III:   // heavy sections;   // - category IV:   // wire rod;   // - category V:   // reinforcing bars;   // - category VI:   // merchant bars.  The sub-categories of category I include the following products:  Category Ia  - hot-rolled wide strip for direct use and export,  - hot-rolled wide strip for re-rolling or other types of processing in other Community undertakings,  - medium and heavy plate with a thickness of 3 mm or more, obtained by cutting hot-rolled wide strip,  - hot-rolled strip less than 600 mm wide, including tube strip.  Category Ib  - cold-rolled sheet cut or coiled, with a thickness of less than 3 mm,  - cold-rolled plate of 3 mm and over (cut or coiled),  - hot-rolled sheet in cut lengths, with a thickness of less than 3 mm,  - cold- or hot-rolled sheet for the production of derived products of categories Ic and Id in other Community undertakings.  Category Ic  - hot-dipped galvanized sheet, cut or coiled,  - galvanized sheet for the production of category Id products in other Community undertakings.  Category Id  other coated flat products.  A detailed list of the products is given in Annex I with the exception of the list of the products for Spanish and Portuguese companies which is given in Annex III.  Article 2  1. As from January 1988 undertakings shall be required to report each month to the Commission their production and deliveries of the products referred to in Article 1. These reports must reach the Commission not later than 10 working days after the end of the month. They must be made in conformity with the forms set out in Annex II, with the exception of declarations by Spanish and Portuguese companies which must be made in conformity with the forms set out in Annex IV.  2. Undertakings which make deliveries of one or more categories of product subject to the quota system under Article 58 of the Treaty to other steel undertakings which are not subject to the steel quota system for the same categories shall be obliged, notwithstanding the explanatory notes in Annex II, to declare such deliveries themselves and the tonnages concerned will be debited against their quotas.  3. For the purposes of supervision as provided for in Article 3, undertakings shall provide authorized representatives of the Commission with a copy of their monthly report and indicate the tonnage for each works.  4. Undertakings shall establish for each works a numbered register recording production as well as daily and monthly deliveries, in accordance with the forms set out in Annex II.  Such a register shall be kept at each works site and be accessible to the authorized representatives of the Commission.  5. For the purposes of this Decision, any group of concentrated undertakings within the meaning of Article 66 of the Treaty shall be regarded as a single undertaking even if such undertakings are located in different Member States.  Article 3  1. The Commission shall manage the monitoring system. It shall examine on the spot the conformity and exactitude of reports and information as referred to in Article 2 of this Decision. The Commission may obtain assistance from independent agencies or experts. The business secrecy of the undertakings shall be guaranteed.  2. The instructions given to verifying officials shall refer to this Decision and indicate the reports supplied by the undertakings they are responsible for inspecting. Undertakings shall be under an obligation to permit such inspections, for which no individual decision shall be necessary.  3. Any undertakings evading their obligations under Articles 2 and 3 (2) or supplying false information shall be liable to the fines and penalties provided for in Article 47 of the Treaty.  II. System of production quotas  Article 4  1. A system of production quotas is hereby established in respect of categories Ia, Ib, II, and III, irrespective of quality or choice.  2. In the case of categories Ia, Ib, II and III, the following products shall be excluded:  - special alloy steels, except for special fine-grained weldable structural alloy steels with a high yield point (Sonderbaustahl),  - permanent way material,  - sheet piling,  - colliery arches, and  - subject to proof being furnished that this material has in fact been processed in the Community, material intended for the production, in the Community, of:  - re-rolled products in category Ib,  - welded tubes more than 406,4 mm in diameter,  - tinplate (including blackplate and TFS),  - electrical sheet with a minimum silicon content of 1 %,  - derived products, falling within categories Ic and Id.  3. Without prejudice to the obligations with regard to information and checks provided for in this Decision, undertakings shall not be subject to the quota system if their annual reference production referred to in Articles 6 does not exceed 200 000 tonnes for all categories subject to the system of quotas. This ceiling shall be 100 000 tonnes in the case of undertakings producing only category III products.  4. However, if during a three-month period an undertaking's production level exceeds 25 000 tonnes, the undertaking shall be subject to the system with effect from the following three-month period. This ceiling shall be 12 500 tonnes in the case of undertakings producing only category III products.  In such a case, the Commission shall allocate reference production to that undertaking on the basis of production in the best 12 calendar months in the period between July 1982 and the last month preceding the quarter for which the quotas are allocated.  If during this period an undertaking's production does not cover at least 12 representative months, the annual production shall be calculated on the basis of the average for the representative months available.  The production shall be used to establish the corresponding reference production on the basis of the abatement rates for the quarters concerned.  These provisions shall also apply to undertakings which bring plants back into service following a total stoppage of their steel activities resulting in the suspension of quotas.  Where the limits provided for in paragraph 4 are exceeded as a result of undeclared investment or investment on which an unfavourable opinion has been given, the undertaking shall be subject to the system and shall receive quotas corresponding to the limits indicated in Article 5 (2).  Article 5  1. The Commission shall fix each quarter, for each undertaking, the production quotas and the part of such quotas which may be delivered in the common market:  - on the basis of the reference production and quantities referred to in Articles 4 (4) and 6,  - by applying the abatement rates referred to in Article 8 to such reference production and quantities.  2. Within the limits laid down in Article 4 (3) the Commission may, if necessary, adjust the quotas fixed pursuant to paragraph 1.  (1) OJ No L 340, 18. 12. 1985, p. 5.  Such adjustment may not lead to quotas in excess of 25 000 tonnes per quarter for all categories for any one undertaking.  It shall be made proportionately to the reference figures and provided the undertaking has itself produced or delivered in the common market the corresponding tonnage.  In the case of undertakings producing only category III products, the adjustment may not lead to quotas in excess of 12 500 tonnes per quarter.  The undertaking in question must submit an application in the course of the quarter and provide proof that this tonnage has actually been produced or delivered by not later than one month following the end of the quarter.  Article 6  1. The reference production and quantities shall be those resulting from the application of Article 6 of Decision No 3485/85/ECSC, including those resulting from the application of Article 4 (5) and exchange and/or transfers and adjustments granted by the Commission pursuant to Articles 13 and 15 of that Decision, calculated on an annual basis, after deduction of products in category Ia intended to be re-rolled as products in category Ib.  2. In the case of an undertaking producing only one category of products subject to quotas or whose production reference of one category exceeds 80 % of that of all its products subject to quotas, the ratio between the total of the reference figures calculated pursuant to Article 6 of Decision No 3485/85/ECSC and the total of the corresponding reference figures for all Community undertakings shall not be less than the same ratio as calculated during the first quarter of 1986. Where appropriate, the Commission shall decide on any necessary corrections.  Article 7  Where, in a category of products, the quotas, including all adjustments pursuant to Articles 14 and 14A, allocated to an undertaking during a quarter are such that the ratio of these quotas to all quotas, including the adjustments referred to above, granted in the Community as a whole for the same category is more than 1 % lower compared with the quotas calculated for the same quarter under Article 6, respectively for that undertaking and for the Community as a whole, during two consecutive quarters, the Commission shall take the necessary measures to limit such a loss to a maximum of 1 % to the extent that, for all the categories of products which it produces, that undertaking has also suffered a loss of relativity of at least 1 %.  The Commission shall lay down the conditions and criteria for applying this provision by means of a general decision.  Article 8  1. The Commission shall fix each quarter, approximately six weeks before the quarter begins, the abatement rates for establishing the production quotas and the part of these quotas which may be delivered in the common market. The Commission may, not later than the first week of the second month of the quarter in question, modify these abatement rates in the light of the development of the market situation.  2. For the second quarter of 1988 the part of the quotas which may be delivered in the Common Market shall be fixed at a level 2 % above the estimated level of demand.  3. The Commission shall notify to each undertaking its reference production and reference quantities as well as its production quotas and the part of those quotas which may be delivered in the common market.  4. Where an undertaking ceases its production activity during a quarter, the Commission shall suspend the allocation of quotas as from the following quarter. Quotas or parts of quotas which have not given rise to production or deliveries may not be exchanged or transferred. In the case of temporary cessation of activity, the suspension shall be lifted once the activity in question resumes and the quotas shall be allocated in proportion to the part of the quarter still to run.  5. Where a plant - a works or an undertaking - undergoes a change of ownership, the new owner shall receive the plant's reference production and quantities and the relevant quotas, save as provided under paragraph 6.  It is forbidden to cricumvent such a transfer of references by selling, exchanging or transferring them.  In the case of a plant producing category Ia and Ib products, the Commission shall take the necessary measures to ensure that the total production of each of categories Ia and Ib placed on the market remains unchanged.  6. Where a company which is bankrupt, being wound up or subject to similar arrangements, continues production, the Commission shall ensure that a sufficient level of restructuring is being achieved. To this end it may, if necessary, reduce or freeze the references of that undertaking or any undertaking which has taken over its activities.  Article 9  The Commission, when setting the abatement rates, shall set up during each quarter a reserve not exceeding 3 % of overall steel demand.  This reserve shall serve in the first place to allocate the additional quotas pursuant to Article 14. The remainder may be used for the application of Article 14A. Article 10  1. With regard to category Ia products which are used in the form of hot-rolled products for the production in the Community, of welded tubes with a diameter not larger than 406,4 mm, undertakings shall be authorized to increase their quotas and parts of quotas which may be delivered in the common market by an amount up to 5 000 tonnes per quarter or up to 30 % of the quantity of these products contained in the parts of quotas which may be delivered in the common market, whichever is the greater. The latter quantity shall correspond to the proportion accounted for by its deliveries for the production of such tubes in the common market in its total Community deliveries for category Ia in the best 12 period referred to in Article 8 (1) of Commission Decision No 2177/83/ECSC (1).  The undertaking may make this increase only on condition that, no later than the month following the quarter in question, it provides proof that the relevant deliveries have been used for the intended purposes.  On a duly substantiated request by an undertaking, the Commission may adjust the quotas and parts of quotas which may be delivered in the common market by a larger amount. The Commission may make the granting of such an adjustment conditional on the production by the undertaking concerned, at the latter's expense, of a report drawn up by a firm of auditors certifying receipt of the undertaking's semi-finished products by the tube-manufacturing client or clients and their actual use for the production in question.  2. On a duly substantiated request by an undertaking, and if special products represent at least 50 % by weight of its production in the category or categories in question, the Commission may adjust the quotas and parts of quotas which may be delivered in the common market if  - the rolls are the property of the user, and the product is reserved for the owner of the rolls,  - the product is reserved for the user by patent,  - the user cannot reasonably be expected to use other undertakings' products.  Article 11  1. A tolerance of 5 % in excess shall be allowed on each production quota and on that part of this quota which may be delivered in the common market. However, the production and that part of the production which may be delivered in the common market for all the categories of products may not exceed the sum of the quotas and the sum of that part of those quotas which may be delivered in the common market allocated for each of these categories.  2. In the case of undertakings which produce only one category or whose reference production of one category represents not less than 80 % of its total reference production of the products referred to in Article 4, a tolerance of 5 % in excess of that part of their production quota which may be delivered in the common market shall be allowed within the limit of the production quota for the category concerned. This tolerance may not be combined with that of paragraph 1.  3. (a) Any undertaking which has not used up its production quotas or the part of its quotas which may be delivered in the common market may carry forward into the following quarter up to 10 % of the amount in question for the same category of product. The Commission may authorize a larger carryover, on receipt of a duly justified request from the undertaking, for products which are subject to any minimum price rules.  (b) Carryovers are authorized within the same limit from the fourth quarter of 1987 to the first quarter of 1988 for products in categories Ia, Ib, II and III.  (c) A complete carryover is allowed for the unused part of the additional quotas and parts of quotas allocated in the last month of the fourth quarter of 1987 for products in categories Ia, Ib, II and III.  (d) Where an undertaking has not attained its production quotas during the quarter in question and can prove that this is the result of circumstances of force majeure or shutdown for repairs lasting at least four consecutive weeks, the Commission may authorize the undertaking concerned to carry over the unused quotas in their entirety.  (e) Where an undertaking does not expect to attain its quotas during the quarter in question, the Commission may, under the conditions set out in (d), allow the undertaking an advance on the quotas for the following quarter not exceeding 20 % of the quotas for the current quarter.  4. Undertakings may, each of the undertakings concerned having made a prior declaration to the Commission, enter into arrangements with other undertakings during the current quarter for the exchange or sale of quotas or parts of quotas which may be delivered in the common market pertaining to that quarter.  5. Deliveries in respect of which an undertaking does not show proof of export outside the territory of the Community shall be deemed to have been made within the common market.  Documents acceptable as evidence of export shall include the following:  (a) a copy, stamped by the customs office of export, of the Community export declaration form 'EU' annexed to Council Decision 87/267/EEC (1) in the case of exports to EFTA countries; or of the Community export declaration form 'EX' provided for in Council Regulation (EEC) No 1900/85 (2) in the case of exports to other third countries;  (b) commercial documents relating to the dispatch instructions for the relevant products and to the carriage thereof, including copies of the shipping orders, maritime bills of lading, inland waterway affreightment contracts and consignment notes for transport by rail or by road.  6. An undertaking's production of hot-rolled wide strip which, in a given quarter, does not fall within the scope of the first and second indents of category Ia shall, for the purposes of this Decision, be regarded as production of coils intended for re-rolling or other processing operations within the undertaking itself.  Any production of hot-rolled wide strip as referred to above which is assigned during ensuing quarters to direct use or export, or to re-rolling or other processing operation in Community undertakings other than the producer shall be charged against the production quota for category Ia (first and second indent) of that producer pertaining to the ensuing quarters in question.  Article 12  A fine, generally of 75 ECU for each tonne in excess, shall be imposed on any undertaking exceeding its production quotas or that part of such quotas which may be delivered in the common market.  If an undertaking's production exceeds its quota by 10 % or more, or if the undertaking has already exceeded its quota or quotas during one of the previous quarters, the fine may be up to double that amount per tonne. The same rules shall apply to any excess over the quantities which may be delivered in the common market.  The amount of the fine shall automatically carry interest.  Article 13  Where undertakings or groups of undertakings subject to the system of production quotas have merged, separated or formed new joint undertakings after 1 January 1984, or do so while this Decision applies, the Commission, with regard to the reference production and quantities, excluding the references resulting from the application of Article 16, shall take the following measures, as appropriate:  1. In the event of concentration within the meaning of Article 66 of the Treaty and authorized in accordance therewith, the reference production and the reference quantities shall consist of the sum of the reference amounts previously calculated for each of the merged undertakings. The reference production and the reference quantities of the merged undertakings shall be reduced by that part corresponding to deliveries of products subject to quotas to be processed into other products subject to quotas effected between those undertakings during the reference period. Should one of the merged undertakings not have any reference figures because of the limits set in Article 4 (3) of the general decision applying at the time of the merger, the rules set out in Article 4 (4) shall apply.  2. In the event of the separation of merged undertakings, the undertakings shall notify the Commission of the division between them of the reference quantities and production previously allocated to the group of which they were part.  In the case of the undertakings' not agreeing on the division mentioned above, the Commisison shall determine the division of the reference production and quantities of the group between the undertakings.  The Commission may act in a similar manner where undertakings are in course of separation and where their conduct is liable to jeopardize the proper functioning of the production quota system.  3. In the event of the formation of new independent undertakings by one or more undertakings which assign to these new undertakings plant which was previously part of the production facilities of the founding undertakings, the undertakings shall notify the Commission of the subdivision between them of the reference production and quantities previously allocated to the separate founding undertakings.  4. The Commission shall carry out any adjustments needed, on the basis, where appropriate, of the opinion of a panel of exports.  (1) OJ No L 208, 31. 7. 1983, p. 1.  (1) OJ No L 134, 22. 5. 1987, p. 1.  (2) OJ No L 179, 11. 7. 1985, p. 4.  Article 14  If, by virtue of the scale of the abatement rate for a certain category of products set for a quarter, the quota system creates exceptional difficulties for an undertaking which, during the 12 months preceding the quarter in question:  - did not receive aids for the purpose of covering operating losses,  - was not the subject to penalties in respect of the price rules, or has paid fines due,  the Commission shall, in respect of the quarter in question, make a suitable adjustment to the quotas and/or parts of quotas which may be delivered in the common market for the category or categories of products in question, provided that the undertaking makes an application to this effect in the first six weeks of the relevant quarter, providing all the requisite supporting documents in the following instances:  1. The reference production for the products or product for which the abatement rate exceeds 30 % represents at least 50 % of the total reference production for all categories of products manufactured by the undertaking.  2. The annual reference production is less than 350 000 tonnes and the abatement rate for one or more categories representing at least 50 % of the total reference production of all the categories of products manufactured by the undertaking exceeds 20 %.  In the first instance, the additional quotas and/or parts of quotas which may be delivered in the common market may not exceed an amount corresponding to a 25 % reduction in the abatement rate for each category of products in question and may not result in a rate of less than 30 %. The total adjustment for all categories of products in question may not exceed 25 000 tonnes per quarter.  In the second instance, the additional quotas and/or parts of quotas which may be delivered in the common market may not exceed an amount corresponding to a 50 % reduction in the abatement rate for each category of products in question and may not result in an abatement rate of less than 20 %.  The Commission may make the granting of the adjustment conditional on the production by the undertaking concerned, at the latter's expense, of a report drawn up by a firm of auditors certifying that the quota system is causing it exceptional difficulties.  Article 14A  The Commission may, at the request of an undertaking to be made before the end of the first month of the quarter in question, grant additional quotas if the undertaking is experiencing serious difficulties caused by the maintenance of the quota system and as a result has acquired a large amount of quotas during at least four quarters within a period of six consecutive quarters after 1 January 1984.  In this respect quotas acquired which have been replaced by the corresponding references shall not be taken into account.  This Article shall not apply to undertakings which receive additional quotas under Article 14.  Article 14B  1. The Commission may allocate additional quotas to undertakings:  - which have received orders from third countries exceeding by over 10 % the part of the quota which the undertaking is not authorized to deliver in the common market,  - which make an application to this effect, accompanied by supporting documents, within the first six weeks of the quarter in which export is to take place  and  - which have not been subject to penalties or have paid fines due imposed in respect of the price rules.  2. If the Commission establishes that these orders are in the interest of the Community, the Commission shall allocate additional quotas to these undertakings corresponding to the quantity in excess of the threshold mentioned in the first indent of paragraph 1. The sum total of these adjustments may not exceed, in any quarter, the quarterly average of the sum total of the parts of quotas which may not be delivered in the common market for all undertakings which were not used in the four preceding quarters. If the average of these unused parts of quotas proves inadequate to satisfy all these increases, the Commission shall reduce these increases proportionally.  3. Undertakings shall communicate to the Commission, within three months of the export, in addition to the evidence of export indicated in Article 11 (6), copies of the import forms of the third country of destination. Deliveries in respect of which an undertaking does not provide such proof of export shall be regarded as having been made within the common market, and the Commission shall modify its decision accordingly. Article 15  Where the undertakings concerned so request in advance, 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.  Where the undertakings concerned so request in advance, the Commission may also authorize exchanges, sales or transfers of all or part of reference production and quantities within the framework of restructuring plans which it has approved.  Where an undertaking wishes to exchange or transfer production of products covered by the quota system which were previously intended for internal processing in conjunction with another undertaking, the Commission may allocate to it the necessary reference figures to permit such exchanges or transfers, provided that production does not increase as a result.  These rules shall apply only if the undertaking in question is not receiving aids not in conformity with Community rules currently in force.  They shall also apply in the case of conversion of a plant in such a way that production capability for one product is permanently altered by more than 20 %.  Article 15A  1. The Commission may make a reduction in an undertaking's quotas if it establishes that the undertaking in question has received aids not in conformity with Community rules currently in force, or that the conditions attached to the authorization of aids have not been complied with.  In such cases the undertaking in question shall not be entitled to an adjustment under Articles 7, 14, 14A and 16.  2. Similarly, no undertaking shall be entitled, in any given quarter, to an adjustment under Articles 7, 14, 14A and 16 if, in the 12 months preceding the quarter in question. it was subject to penalties under the quota system, unless it has paid all fines due.  Article 16  Where the Commission finds, following receipt of a request from an undertaking whose plants are located in Greece or Ireland, that the quota system is causing the undertaking concerned exceptional difficulties likely to prevent it from adapting to the structural developments in that country's economy, it shall make an appropriate adjustment to the quotas or parts of quotas which may be delivered in the common market for the undertaking and products in question, providing that the undertaking in question has not been subject to penalties in respect of the price rules or has paid fines due.  Article 17  1. Each quarter, for a category of products to be decided by them, undertakings shall be permitted to convert a portion of the difference between their production quota derived from their reference production and the proportion of the quota which may be delivered in the common market derived from their reference quantity into quotas for delivery in the common market at the rate of 1: 0,85. This portion shall not exceed 30 % where the ratio of reference quantities to reference production for all products subject to the quota system is more than 15 percentage points below the relevant average for all undertakings. It shall not exceed 15 % where this ratio is more than five percentage points below the average, or 5 % where the ratio is better than the latter. The average for all undertakings and product categories is 73 %.  2. Undertakings excercising the option granted in paragraph 1 shall notify the Commission before the end of the quarter in question.  Article 18  1. If radical changes occur on the iron and steel market or if the application of this Decision encounters any unforeseen difficulties, the Commission shall carry out the necessary adjustments by general decision.  2. Without prejudice to the application of Article 58 (3) of the Treaty, this Decision shall apply for the period 1 January to 30 June 1988.  3. The provisions concerning the production quota system shall not apply to Spanish and Portuguese undertakings.  Article 19  This Decision shall enter into force on the day of its publication in the Official Journal of the European Communities. This Decision shall be binding in its entirety and directly applicable in all Member States.  Done at Brussels, 6 January 1988.  For the Commission  Karl-Heinz NARJES  Vice-President