1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 15 NOVEMBER 1985, FERRIERE SAN CARLO SPA, WHOSE REGISTERED OFFICE IS AT CAINO, PROVINCE OF BRESCIA, ( HEREINAFTER REFERRED TO AS "SAN CARLO ") BROUGHT AN ACTION UNDER ARTICLE 33 OF THE ECSC TREATY FOR A DECLARATION THAT THE COMMISSION' S DECISION OF 9 OCTOBER 1985 IMPOSING ON IT A FINE OF 117*150*ECU FOR EXCEEDING ITS PRODUCTION QUOTA FOR STEEL TO BE DELIVERED ON THE COMMON MARKET ( HEREINAFTER REFERRED TO AS "DELIVERY QUOTA ") IN RESPECT OF PRODUCTS IN CATEGORY V ( REINFORCING BARS ) FOR THE FOURTH QUARTER OF 1983 .
2 THAT DECISION WAS ADOPTED ON THE BASIS OF COMMISSION DECISION NO*2177/83/ECSC OF 28 JULY 1983 ON THE EXTENSION OF THE SYSTEM OF MONITORING AND PRODUCTION QUOTAS FOR CERTAIN PRODUCTS IN THE STEEL INDUSTRY ( OFFICIAL JOURNAL 1983, L*208, P.*1 ).
3 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR THE BACKGROUND TO THE DISPUTE 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 .
4 IN SUPPORT OF ITS CLAIM FOR THE ANNULMENT OF THE DECISION, SAN CARLO RELIES ESSENTIALLY ON TWO SUBMISSIONS . IT ARGUES, FIRST OF ALL, THAT THE STOCKS OF REINFORCING BARS FROM WHICH THE EXCESS PRODUCTS DELIVERED CAME WERE CONSTITUTED IN COMPLIANCE WITH PRODUCTION QUOTAS PREVIOUSLY ALLOCATED AND, CONSEQUENTLY, IT SHOULD HAVE BEEN POSSIBLE TO DISPOSE OF THEM ON THE COMMON MARKET IN ADDITION TO THE DELIVERY QUOTAS . SECONDLY, IT CLAIMS THAT THE SALE WAS CARRIED OUT IN ACCORDANCE WITH THE GENERAL PRACTICE ADOPTED BY THE COMMISSION IN RESPECT OF STOCKS EXISTING ON 30 JUNE 1981 AND 30 JUNE 1982 . ACCORDING TO THAT PRACTICE, WHICH HAS NEVER BEEN DISCONTINUED, DISPOSAL OF SUCH STOCKS IN ADDITION TO THE DELIVERY QUOTA HAS ALWAYS BEEN TOLERATED .
5 WITH REGARD TO THE FIRST SUBMISSION ALLEGING THAT SAN CARLO COMPLIED WITH ITS PRODUCTION QUOTAS, IT MUST BE POINTED OUT THAT ACCORDING TO ARTICLE 5 OF DECISION NO 2177/83/ECSC OF 28 JULY 1983, CITED ABOVE, RE-ENACTING THE PROVISIONS OF ARTICLE 5 OF BOTH DECISION NO 1696/82/ECSC OF 30 JUNE 1982 ( OFFICIAL JOURNAL 1982, L*191, P.*1 ) AND DECISION NO 1831/81/ECSC OF 24 JUNE 1981 ( OFFICIAL JOURNAL 1981, L*180, P.*1 ), WHICH PRECEDED IT, "THE COMMISSION SHALL FIX EACH QUARTER, FOR EACH UNDERTAKING, THE PRODUCTION QUOTAS AND THE PART OF SUCH QUOTAS WHICH MAY BE DELIVERED ON THE COMMON MARKET ".
6 IT FOLLOWS FROM THOSE PROVISIONS THAT THE QUOTA SYSTEM, ESTABLISHED IN ORDER TO DEAL WITH A MANIFEST CRISIS IN THE EUROPEAN STEEL INDUSTRY, COMPRISES NOT MERELY PRODUCTION QUOTAS BUT ALSO DELIVERY QUOTAS SET AT A QUANTITY LOWER THAN THE FORMER . IT CAN BE SEEN BOTH FROM THE FIFTH RECITAL IN THE PREAMBLE AND FROM ARTICLE 11*(6 ) OF THE ABOVEMENTIONED DECISION THAT THE DIFFERENCE IN THE TWO QUOTAS IS DESIGNED TO ORIENT THE PRODUCTION OF COMMUNITY UNDERTAKINGS TOWARDS MARKETS OUTSIDE THE COMMUNITY .
7 FURTHERMORE, ARTICLE 12 OF DECISION NO 2177/83/ECSC REQUIRES UNDERTAKINGS TO COMPLY NOT MERELY WITH THEIR PRODUCTION QUOTAS BUT ALSO WITH THEIR DELIVERY QUOTAS .
8 CONSEQUENTLY, THE FACT THAT SAN CARLO COMPLIED WITH ITS PRODUCTION QUOTAS COULD NOT AUTHORIZE IT TO EXCEED THE DELIVERY QUOTA ALLOCATED TO IT . THE FIRST SUBMISSION MUST THEREFORE BE REJECTED .
9 WITH REGARD TO THE SECOND SUBMISSION ALLEGING TOLERANCE ON THE PART OF THE COMMISSION, IT MUST BE EMPHASIZED THAT IN REPLY TO THE APPLICANT' S ARGUMENT THE COMMISSION ADMITTED THAT IT HAD IN PRACTICE TOLERATED THE DISPOSAL IN ADDITION TO DELIVERY QUOTAS OF STOCKS OF REINFORCING BARS EXISTING ON 30 JUNE 1981 AND 30 JUNE 1982 . HOWEVER, THE COMMISSION CONTENDS THAT UNDERTAKINGS COULD NOT FAIL TO BE AWARE THAT THAT PRACTICE WAS NO LONGER ACCEPTED WITH EFFECT FROM 1 JULY 1983, BY VIRTUE OF THE FACT THAT THE SECOND SUBPARAGRAPH OF ARTICLE 2*(1 ) OF DECISION NO 2177/83/ECSC LIMITED THE OBLIGATION TO REPORT STOCK POSITIONS AS AT 30 JUNE 1983 TO CATEGORIES II AND III . THAT CIRCUMSTANCE WAS SUFFICIENT, IT SAYS, TO SHOW THAT STOCKS OF CATEGORY V PRODUCTS ( REINFORCING BARS ) COULD NO LONGER BE TAKEN INTO CONSIDERATION AS A JUSTIFICATION FOR SALES IN EXCESS OF THE ALLOCATED DELIVERY QUOTAS .
10 IT MUST BE POINTED OUT IN THAT REGARD THAT NO GENERAL DECISION IN FORCE BETWEEN 1 JULY 1981 AND 30 JUNE 1983, THAT IS TO SAY NEITHER DECISION NO 1831/81/ECSC NOR DECISION NO 1696/82/ECSC, LAID DOWN RULES APPLICABLE TO STOCKS OF PRODUCTS IN EXISTENCE EITHER ON 30 JUNE 1981, THE DATE ON WHICH THE PRODUCTION AND DELIVERY QUOTA SYSTEM CAME INTO EFFECT, OR ON 30 JUNE 1982 . THE SECOND SUBPARAGRAPH OF ARTICLE 2*(1 ) OF DECISION NO 1696/82/ECSC MERELY REQUIRED UNDERTAKINGS TO REPORT THEIR STOCK POSITION AS AT 30 JUNE 1982 . HOWEVER, ACCORDING TO THE THIRD RECITAL IN THE PREAMBLE TO THE SAME DECISION, THE SOLE PURPOSE OF THAT OBLIGATION WAS TO IMPROVE MONITORING OF THE SYSTEM OF PRODUCTION QUOTAS .
11 FURTHERMORE, NO PROVISION OF DECISION NO 2177/83/ECSC EXPRESSLY TERMINATED THE PRACTICE FOLLOWED BY THE COMMISSION DURING THE TWO PRECEDING YEARS . THE MERE FACT THAT UNDER THE LATTER DECISION, STOCKS OF CATEGORY V PRODUCTS NO LONGER HAD TO BE REPORTED CANNOT BE REGARDED AS A CLEAR ALTERATION OF THE PREVIOUS PRACTICE .
12 NOR CAN IT BE INFERRED EITHER FROM THE DOCUMENTS ON THE FILE OR FROM THE ARGUMENTS PRESENTED TO THE COURT THAT SAN CARLO WAS INDIVIDUALLY WARNED IN GOOD TIME OF THE TERMINATION OF THAT PRACTICE . IN REPLY TO A QUESTION PUT BY THE COURT, THE COMMISSION ADMITTED THAT IT HAD INFORMED SAN CARLO FORMALLY OF THE DISCONTINUANCE OF THE PRACTICE IN QUESTION ONLY IN NOVEMBER 1984, THAT IS TO SAY AFTER THE PERIOD IN REGARD TO WHICH A SANCTION WAS IMPOSED IN RESPECT OF THE CONTESTED EXCESS DELIVERIES .
13 CONSEQUENTLY, IT MUST BE ACCEPTED THAT SAN CARLO WAS ENTITLED TO CONSIDER THAT IN THE FOURTH QUARTER OF 1983 THE COMMISSION HAD NOT TERMINATED ITS PRACTICE OF TOLERATING DELIVERIES IN EXCESS OF QUOTAS FROM STOCKS OF REINFORCING BARS EXISTING ON 30 JUNE 1981 AND ON 30 JUNE 1982 . THE COMMISSION WAS THEREFORE REQUIRED, BEFORE IMPOSING THE CONTESTED SANCTION, TO VERIFY THAT THE EXCESS COMPLAINED OF COULD NOT BE ATTRIBUTED TO THE PRACTICE WHICH WAS TOLERATED IN 1981 AND 1982 . HOWEVER, IT APPEARS FROM THE STATEMENT OF THE REASONS ON WHICH THE CONTESTED DECISION IS BASED THAT THE COMMISSION REFUSED AS A MATTER OF PRINCIPLE TO CARRY OUT THAT CHECK . IT THEREFORE ACTED CONTRARY TO THE APPLICANT' S LEGITIMATE EXPECTATION THAT THE DEGREE OF TOLERANCE THAT HAD BEEN ACCEPTED FOR TWO YEARS WOULD BE CONTINUED . THE APPLICANT' S SECOND SUBMISSION MUST THEREFORE BE UPHELD AND THE CONTESTED DECISION MUST BE DECLARED VOID .
14 IT IS FOR THE COMMISSION, IN EXECUTION OF THIS JUDGMENT, TO REOPEN THE CASE AND CARRY OUT THE CHECK MENTIONED ABOVE .