delivered on 27 November 1984 (*1)

Mr President,

Members of the Court,

1.Since the crisis in the iron and steel industry continued in 1983 the system of monitoring and production quotas for certain products of undertakings in the steel industry (in its various guises it is wellknown to the Court from a number of cases) was extended by Decision No 2177/83 of 28 July 1983 (Official Journal 1983 L 208, p. 1) until 31 January 1984.

For the purposes of the present proceedings it is necessary to mention only that Article 14 provided for an adjustment of quotas for undertakings which were experiencing exceptional difficulties because of the scale of the abatement rate for certain categories of products set for a quarter. The adjustment was subject to the condition, first, that the relevant undertakings did not receive aid pursuant to Commission Decision No 2320/81 (Official Journal 1981 L 228, p. 14) during the twelve months preceding the quarter in question (with the exception of aid for closure as provided for in Article 4). It should also be mentioned that pursuant to Article 14a an increase in the reference production and reference quantities was possible on certain conditions which are now of no further interest and subject also to the aforementioned restriction relating to aid. Furthermore, Article 15a provided that the Commission might reduce the quotas if it established that the undertaking in question had received aid not authorized by the Commission pursuant to Decision No 2320/81, and it was stated that the undertaking in question should not be entitled to an adjustment under Articles 14, 14a, 14b, 14c or 16.

Only a relatively short time after that decision was adopted the Commission decided that its application was encountering unforeseen difficulties as contemplated in Article 18 (1) of Decision No 2177/83, which states:

‘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.’

On 30 September 1983, therefore, it adopted Decision No 2748/83 amending Decision No 2177/83, which provided in Article 1 as follows:

‘The first indent of the first paragraph of Article 14 and the second indent of Article 14a (4) of Decision No 2177/83/ECSC are hereby replaced by the following:

“did not receive aids authorized by the Commission with a view to covering operating losses”.’

That meant that all undertakings which in the twelve months prior to the quarter in question had received aid pursuant to Decision No 2320/81, provided it was not aid to cover operating losses, might have the benefit of the rules relating to adjustment.

It must be remembered that Decision No 2320/81 stated that aid financed by Member States or through State resources might be considered compatible with the Common Market (subject to certain conditions) if it was:

— aid in support of investment in the steel industry pursuant to an investment programme notified to the Commission (Article 3);

— aid to defray the normal costs resulting from the partial or total closure of steel plants (Article 4);

— aid to facilitate the continued operation of certain undertakings or plants (Article 5; provided they are limited to a maximum of two years, are progressively reduced at least once each year and do not lead to payments after 31 December 1984);

— emergency aid intended to rescue an undertaking and required to cope with acute social problems (Article 6; provided such aid is of a maximum duration of six months and is not approved after 31 December 1981);

— aid for research and development projects which have certain objectives (Article 7).

It must also be remembered that pursuant to Article 2 of Decision No 2320/81 aid was to be granted not later than 1 July 1983 and that pursuant to Article 4 aid for closures might be approved after 1 July 1983.

The applicant company, Finsider, which according to the Commission received aid for operating losses, considers the amendment of Decision No 2177/83 to be unlawful. The Commission's view that Finsider received aid to cover operating losses is not correct. Finsider claims that the Commission has misused its powers by discriminating against it; that Article 18 of Decision No 2177/83 has been infringed; that there is an insufficient statement of reasons in Decision No 2748/83; and that it infringes Decision No 2320/81 and is in breach of the principle of equal treatment enshrined in Article 4 (b) of the ECSC Treaty. The applicant therefore brought an action on 10 November 1983 claiming that the Court should:

—Declare Decision No 2748/83 void;

—Adopt any further measure, in the light of inter alia Article 34 of the ECSC Treaty, which it considers necessary;

—Order the Commission to pay the costs.

The Commission contends that the application should be dismissed with costs. It leaves the Court to determine whether the application is admissible. It considers that the applicant's complaints regarding what the Commission has done are unfounded. On the question of aid for Finsider the Commission says that Finsider made an application pursuant to Article 14 of Decision No 2177/83 for the third quarter of 1983. The Commission rejected the application. The applicant accepted the rejection and brought no action challenging it.

2.In my opinion these proceedings may be considered as follows:

2.1.Admissibility of the application

There are objections, which need to be considered, from two points of view: on the one hand it may be doubted whether the applicant has any interest in bringing an action and on the other it appears doubtful whether the conditions of Article 33 (2) of the ECSC Treaty are satisfied.

2.1.1.If I have properly understood the purpose of the action the applicant is seeking primarily the removal of the condition introduced by Decision No 2748/83 (to the effect that undertakings making applications under Article 14 of Decision No 2177/83 did not receive aid to cover operating losses) which would mean that it would be possible for an adjustment of quotas to be made in the case of exceptional difficulties for all undertakings which received aid (even to cover operating losses).

In that respect the Commission stated that under the said Article 15a of Decision No 2177/83 adjustments of quotas are excluded if it is established that the undertaking has received unauthorized aid. It maintains that the applicant has received such unauthorized aid. That was not only stated in the rejection of an application for an adjustment, (which the applicant did not challenge) but is the subject of proceedings under Article 88 of the ECSC Treaty.

If that is true it means that as far as that objective is concerned the applicant has no interest in bringing an action, for even if Article 14 were amended the applicant would not be entitled to an adjustment of its quota.

I hesitate, however, to dub the action as inadmissible on that ground. First there is the fact that the applicant took pains to emphasize that it had not been alleged that it had received improper aid (and in that respect it must be conceded that there is no reliable information about a decision on an application by the applicant under Article 14 of Decision No 2177/83, or proceedings under Article 88 of the ECSC Treaty or about other findings for the purposes of Article 15a of Decision No 2177/83).

Secondly, it is not inconceivable that the application has another objective, namely, after the annulment of the amendment of Decision No 2177/83 by Decision No 2748/83, the reestablishment of the previous position (according to which adjustments in quotas were possible only for undertakings which, apart from aid in respect of closures, had received no aid). That would mean that no adjustment of quota was justified for quite a number of other undertakings which had received aid. It is difficult, however, to assume that the applicant has no interest in thus rectifying what amounted in its view to a distortion of competition, even though now that the period of validity of the regulation and its actual application has elapsed it may be that compensation under Article 34 of the ECSC Treaty is all that may be offered.

I should therefore not wish to propose that the action be dismissed for lack of interest in bringing it.

2.1.2.As regards the other aspect of the case, namely fulfilment of the conditions in Article 33 (2) of the ECSC Treaty, it is clear that the contested decision, which amends provisions of general scope (that is, rules of law) in Decision No 2177/83, is likewise of general scope. It can therefore be challenged by an undertaking only if the undertaking considers that the decision involves a misuse of powers affecting it.

As regards the concept of misuse of powers it was early made clear in the case-law (Cases 2/57 (1) and 8/57 (2)) that essentially it depends on the objective pursued by the measure. Thus there is a misuse of powers if a power is used for a purpose other than that for which it is given, and if a decision pursues an objective other than that which may lawfully be pursued; that is, there must be an unlawful motive.

We must also consider, as I said, whether the required special procedure has been circumvented (cf. Case 2/57 (3)

), in which it was alleged that the High Authority in order to circumvent the protection afforded by Article 59 of the ECSC Treaty had recourse to the procedure under Article 53 (b) in a case which required the procedure under Article 59 to be adopted; and Joined Cases 140 and 221/82 (4) where it was alleged that there had been a general increase in quotas without recourse to the procedure laid down in Article 58 of the ECSC Treaty).

It is also important to note that misuse of powers exists not only where the misuse is deliberate but also where there is a serious failure to exercise foresight or prudence, tantamount to disregard of the purpose of the legislation. Finally, it should be mentioned that in Case 8/57 (5) it was held that disregard of the principle of equality of consumers in relation to persons whose interests have been intentionally sacrificed would represent a misuse of powers.

More particularly, as far as the phrase ‘misuse of powers affecting them’ in the second paragraph of Article 33 is concerned, it is clear from the case-law that it is not necessary to prove the existence of a misuse of powers for the purposes of admissibility of the action. It was held (in Case 3/54 (6)) that it was sufficient for the applicant formally to allege that there had been a misuse of powers affecting it and to give the reasons for which it considered that there had been a misuse of powers affecting it. In the judgment in Joined Cases 55 to 59/63 (7) it is stated accordingly that the applicant must make out a prima facie case of misuse of powers affecting it; in the judgment in Joined Cases 3 and 4/64 (8) it was stated that the applicant had convincingly to point to facts and circumstances indicating the probability that the High Authority, for want of foresight or serious lack of care amounting to disregard of the purpose of the legislation, had pursued objectives other than those for which the powers had been conferred upon it.

In relation to the words ‘affecting them’, which are of central importance in the second paragraph of Article 33 of the ECSC Treaty, although it was emphasized in the judgment in Case 8/55 (9) that it is not necessary to allege that an individual decision affecting the applicant has been disguised as a general decision, the case-law confirms that a relatively strict interpretation of that condition has usually been held to be proper. In that respect reference may be made to the said judgment in which on the one hand it was stated that the right of action under the second paragraph of Article 33 is an exception which is explained by the fact that, in this case, it is still the individual factor which prevails and on the other hand it was said that the applicant should be the subject, or at any rate the victim, of the alleged misuse of powers. In that respect the judgment in Joined Cases 55 to 59/63 and 61 to 63/63 (10) may be mentioned, in which it was emphasized that grounds must be put forward to show that the contested decision is directly prejudicial to the applicant's interests (which cannot be so if all applicants are affected to the same extent by the decision).

It may, however, be asked whether there has not been a certain easing of that view in recent case-law (cf. Joined Cases 140 and 221/82 (11)). In those cases an action by an association was declared admissible in relation to a decision generally raising the quotas for certain undertakings (monoproducers of reinforcing bars) because certain members of the association who also produce the products in question were excluded from the increased quota and thus put at a disadvantage in competition. Nevertheless, I think that there are no sufficiently clear grounds for concluding that the longstanding case-law to which I have referred has undergone a fundamental change, for I have the impression that in the last-mentioned case it was significant that the problem of substantive law raised had nevertheless to be considered in the context of actions challenging individual decisions.

If the present case is considered in the light of those factors then it is difficult to deny that the applicant has raised a complaint of misuse of powers and to some extent supported it by submissions.

That may be said in relation to the first claim, namely misuse of powers in the form of discrimination against the applicant, because it was submitted that the contested decision had effects which ran counter to the objectives of the rules on the adjustment of quotas (support of undertakings which are in special difficulties) and thus disregarded them. It was also alleged that the decision penalized undertakings which were particularly affected by the steel crisis (it pursued an unlawful objective), whereas at the same time it strengthened the position of their competitors (by means of an adjustment of quotas in spite of their receiving aid) enabling them to improve their production.

The same may also be said of the complaint of infringement of Article 18 of Decision No 2177/83. The applicant submitted that there could be no question of unforeseeable difficulties justifying the adoption of Decision No 2748/83 because when Decision No 2177/83 was adopted (on 28 July 1983) the aids granted and intended were known, and thus it had to be assumed that the Commission with knowledge of that fact made a conscious choice in the original formulation of Articles 14 and 14a of Decision No 2177/83. Thus there had been a misuse of that provision and a circumvention of Article 58 of the ECSC Treaty, which must be applied for any amendment of Decision No 2177/83, and therefore it could be said that there had been an abuse of procedure as defined by the Court in the cases just cited.

Another complaint which may merit consideration here is the complaint of infringement of Decision No 2320/81, which did not provide for any kind of hierarchy between the various kinds of aid; thus, in particular by introducing a penalty, the contested decision effected an amendment of Decision No 2320/81.

On the other hand, no account need be taken of the complaint of failure to state reasons (with regard to the application of Article 18 of Decision No 2177/83), nor can the unsupported allegation of infringement of the principle of equal treatment be regarded as falling within the category of misuse of powers.

I do not, however, wish to discontinue my inquiry at that stage, not least of all because there may be doubts regarding the correctness of that result in view of the judgment in Joined Cases 140 and 221/82, (12) and I shall therefore deal, at least in the alternative, with the substance of the action.

In doing so I must, however, (according to the judgments in Cases 8/55, (13) 13/57, (14) Joined Cases 36 to 38/58 (15) and Joined Cases 55 to 59/63 (16)) confine myself strictly to what can be understood as comprising the complaint of misuse of powers and disregard any submissions which fall under the heads of infringement of the Treaty or breach of essential procedural requirements.

The first submission: misuse of powers in the form of discrimination against the applicant (in considering this it is necessary to take account of some of the submissions put forward under the heading ‘disregard of the principle of equal treatment — Article 4 (b) of the ECSC Treaty’)

May I say first of all that my impression is that in all the applicant has said no arguments are apparent which could justify such a criticism of the contested decision.

The Court has already repeatedly considered the question of what constitutes discrimination. Thus in the judgment in Joined Cases 17 and 20/61 (17) (at p. 659) it was stated that for the High Authority 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. In the judgment in Case 8/57 (18) (I need not give any other examples) it was stated in that respect (at p. 257) that if there is no objectively established foundation for the difference in treatment, it is arbitrary; it cannot be alleged, however, that economic rules are unfair on the pretext that they involve different consequences or disparate disadvantages for the persons concerned when this is clearly the result of different operating conditions. On that basis the provisions of Articles 14 and 14a of the contested decision can scarcely be said to be discriminatory.

One thing is clear: the applicant obviously does not object to the fact that the quota system takes account of the grant of aid, nor is that really open to criticism. In that respect it is relevant to mention that the Court has held that the Commission enjoys a very wide discretion as to the content and application of the rules on adjustment (compare the judgments in Case 317/82 (19) and Joined Cases 303 and 312/81 (20)). In the light also of the view expressed by the Advocate General in Case 119/81 (21) (that aid may be relevant in the application of Article 14) and the finding of the Court in that case that the Commission could take account of situations which were contrary to the prohibition on aid in Article 4 (c) of the ECSC Treaty, this can hardly be regarded as a wrongful exercise of discretion. Furthermore the Commission must be regarded as correct in principle in adopting a very critical attitude vis-à-vis State aid and imposing stringent rules in relation thereto. That accords with the basic position of the ECSC Treaty on such matters and in addition with the fact that for the purpose of adjustment of quotas only very limited exceptions can be provided if the system is not to lose all effect.

If on that basis a distinction is made according to the kind of aid granted and aid to make good losses is treated as grounds for exclusion, no criticism can be made of the Commission to the effect that in any event to avoid the complaint of discrimination it should have stated what reasons for the losses were to be the criterion (inefficient management, the carrying out of restructuring measures or the prevention of their being carried out in good time by the proprietors behind the undertakings) and only then should decisions on applications for adjustment be taken. That argument overlooks the fact that the Commission has to authorize aids and thus is informed to some extent of the situation of the undertakings concerned so as to permit a general.

assessment to be made. Nor can I agree with the applicant's argument that on the one hand all aid has a similar effect on the conditions of production (so that equal treatment must be the norm) and on the other that the amendment of Article 14 by Decision No 2748/83 is inconsistent with the aim of the system (to support undertakings which are experiencing particular difficulties), because undertakings with the worst results were excluded from obtaining an adjustment of quotas (thereby adversely affecting their productivity), whereas better placed undertakings, which have likewise received aid, could enjoy an increase in quotas. Quite obviously the effects vary according to the objectives and the (different) criteria which have to be observed. Thus quite apart from the very different sizes of the undertakings, a factor which was mentioned in the proceedings, it is undoubtedly right (even in the light of the general aims of the Treaty) to regard aid to cover operating losses with the utmost caution, for they have particularly harmful effects on competition (since they can lead to undercutting of prices) and contribute the least to achieving the aim of restructuring the steel industry (as is shown by the applicant's case, for its efforts to restructure in no way correspond to what the Commission had in mind). It is also clear that there is no inconsistency between the various aims, as alleged by the applicant, and that there can scarcely be said to be a distortion of competition vis-à-vis other undertakings which are entitled to adjustments of their quotas.

If undertakings which have received aid to cover operating losses in fact have particularly bad operating results, that is obviously intended to be remedied by the aid. Thus there is no cause to take that again into account by increasing quotas, which would entail further delays in restructuring. On the other hand, it became apparent that many undertakings, especially the smaller and medium-sized ones, were experiencing exceptional difficulties as a result of the quota system. If that was taken into account by means of adjusting their quotas, that cannot be labelled an unjustified advantage which distorts competition, because they received aid, often quite modest, for very specific purposes, and the compensation thus offered was not sufficient to counteract their problems.

Finally, in so far as the applicant suggested in that connection that the contested amendment favoured only German undertakings (which alone, apart from ARBED Saarstahl, received no aid to cover operating losses), the Commission was not contradicted when it said that in fact the amended Article 14 benefited many small and medium-sized undertakings, including some in Italy, whereas the majority of the large undertakings in most Member States were excluded from its application.

The second submission: breach and misapplication of the exception provided by Article 18 of Decision No 2177/83

The applicant claims that there were ‘unforeseen difficulties’ if problems arose only after the adoption (on 28 July 1983) of the decision which was later amended, and if therefore there could not have been said to be a mistake on the part of the Commission inasmuch as there were exceptional circumstances of which it was unaware. That was not, however, the case, for the Commission, which had already adopted its decision in relation to aid on 29 June 1983, was aware of the position in relation to aid and thus knew that no State was providing only for aid for closure; it was thus quite foreseeable that because of the restrictions in the original version of Article 14 only a few undertakings could rely on it.

I cannot agree with the applicant on that issue either.

If I understand the position correctly, the Commission relied not only on the presence of unforeseen difficulties but also on the other conditions in Article 18, namely that there had been radical changes in the iron and steel market in that the crisis had worsened, for which reason, moreover, other amendments to the system were made in December 1983 (cf. Decisions Nos 3175/83 fixing minimum prices, 3716/83 establishing a guarantee system and a system for the verification or the minimum prices and 3717/83 introducing a production certificate and an accompanying document for deliveries of certain products).

I think, however, that although the Commission was aware of the various kinds of aid when it adopted Decision No 2177/83, it rightly referred to unforeseen difficulties which required an amendment of Decision No 2177/83. Apparently it proceeded in July 1983 on the basis of a kind of general assessment (the grant of aid was adopted as a criterion for the first time in the quota system) justifying the conclusion that all undertakings which received aid (except for closure) would manage without having to seek an adjustment of quotas. It was only later, when the position of undertakings making application for adjustment was individually examined as required by Article 14, that it appeared that the general forecast was not correct, not least because the crisis had worsened, and a number of smaller and medium-sized undertakings which had received only modest aid and had already previously been entitled to adjustment were still dependent on an increase in quotas in order to avoid exceptional difficulties.

As I see it, that is just such a position as was contemplated by Article 18 of Decision No 2177/83, and thus there can be no question of the Commission's having disregarded that provision, or of an abuse of procedure.

The third submission: breach of Decision No 2320/81

The applicant claimed in this respect that according to that decision all aid which was authorized was of the same merit and rank. The contested decision departed from that by establishing a kind of hierarchy. It was wrong for that decision to introduce something akin to a penalty (exclusion from adjustment of quotas for undertakings which had received aid to cover operating losses) which was provided for neither in the Treaty nor in the rules on aid.

On that issue, too, I am unable to agree with the applicant, if what it alleges can in fact be regarded as a misuse of powers.

The very premise on which its allegation rests is incorrect. It is obvious that Decision No 2320/81 classifies the various kinds of aid differently. That is clear in Section II of the preamble and is also supported by an analysis of its provisions, which lay down different criteria and time-limits (according to the effect of the aid on competition and its utility for the purposes of restructuring). In particular, it is to be observed that the provisions on aid to cover operating losses are exceptionally severe, obviously because they have the most harmful effects on competition; for example, they must ‘not lead to payments after 31 December 1984’ (Article 5 (1) of Decision No 2320/81, Official Journal 1981, L 228, p. 16).

Accordingly, if the Commission for the purposes of another measure in which aid, as we have seen, could in fact be taken into account, had regard to the varying degree of harm attached to the different kinds of aid, that certainly does not amount to an amendment of Decision No 2320/81. It is, at most, an extension of it, with due respect for its fundamental principles, to another area, the relatedness of which is easy to recognize because the quota system and the exceptional authorization of aid are justified solely on the basis of the crisis in the iron and steel industry.

In view of those considerations of fact and law there is no ground for the adoption of any ‘other measures’ by the Court as the applicant requests.

To summarize:

The action should be dismissed as inadmissible, or alternatively as unfounded, and the applicant should be ordered to pay the costs.

Translated from the German.

Case 2/57, Compagnie des Hauls Fourneaux de Chasse v High Authority of the ECSC [1957 and 1958] ECR 199.

Case 8/57, Groupement des Hauts Fourneaux et Aciéries Belges v High Authority of the ECSC [1957 and 1958] ECR 245.

Case 2/57, Compagnie des Hunts Fourneaux de Chasse v High Authority of the ECSC [1957 and 1958] ECR 199.

Joined Cases 140 and 221/82, Wakstahl-Vereinigung and Thyssen AG v Commission of the European Communities [1984] ECR 951.

Joined Cases 55 to 59 and 61 to 63/63, Acciaierie Fonderie Ferriere dì Modena and Others v High Authority of the ECSC [1964] ECR 211.

Joined Cases 3 and 4/64, Chambre Syndicale de la Sidérurgie Française and Others v High Authority of the ECSC [1965] ECR 441.

Case 8/55, Fédération Charbonnière de Belgique v High Authority of the ECSC [1954 to 1956] ECR 245.

Joined Cases 55 to 59 and 61 to 63/63, Acciaierie Fonderìe Fernere di Modena and Others v High Authority of the ECSC [1964] ECR 211.

Joined Cases 140 and 221/82, Wakstahl-Vereinigung and Thyssen AG v Commission of the European Communities [1984] ECR 951.

Case 8/55, Fédération Charbonnière de Belgique v High Authority of the ECSC [ 1954 to 1956] ECR 245.

Joined Cases 55 to 59 and 61 to 63/63, Wakstahl-Vereinigung and Thyssen AG v Commission of the European Communities [1984] ECR 951.

Case 3/54, Associazione Industrie Siderurgiche Italiane (Assider) v High Authority of the ECSC [1954 to 1956] ECR 63.

Joined Cases 36 to 38, 40 and 41/58, Società Industriale Metallurgica di Napoli (Simet) and Others v High Authority of the ECSC [1959] ECR 157.

(16) Joined Cases 55 to 59 and 61 to 63/63, Acciaierie Fonderie Ferriere di Modena and Others v High Authority of the ECSC [1964] ECR 211.

(17) Joined Cases 17 and 20/61, Klöckner-Werke AG and Hoescb AG v High Authority of the ECSC [1962] ECR 325.

(18) Case 8/57, Groupement des Hauts Fourneaux et Aciérìes Belges v High Authority of the ECSC [1957 and 1958] ECR 245.

(19) Case 317/82 Usines Gustave Soël SA and Fabrique de Fer de Maubenge SA v Commission of the European Communities [1983] ECR 2041.

(20) Joined Cases 303 and 312/81, Klöckner-Werke AG v Commission of the European Communities [1983] ECR 1507.

(21) Case 119/81, Klöckner-Werke AG v Commission of the European Communities [1982] ECR 2627.