DELIVERED ON 29 OCTOBER 1981 (1)

Mr President,

Members of the Court,

The action on which I am about to give my opinion challenges the fixing of production quotas for the first quarter of 1981 pursuant to Commission Decision No 2794/80/ECSC of 31 October 1980, establishing a system of steel production quotas for undertakings in the iron and steel industry (Official Journal, L 291, 31.10.1980, p. 1), and Commission Decision No 3381/80/ECSC of 23 December 1980 (Official Journal, L 355, 30.12.1980, p. 37), fixing the rates of abatement for the period in question. As the Court is acquainted with the system of production quotas, I may confine my remarks to a recapitulation of the provisions which are relevant to this present case.

Article 4 of Decision No 2794/80 contains the methods for calculating the reference production figures on which the abatement is to be based. Paragraphs (1) and (2) of that provision indicate the method for calculating the actual production during the reference period, whilst paragraphs (3), (4) and (5) govern the circumstances in which the actual reference production figures may be adjusted. Thus paragraph (3) provides as follows:

“However, if during the period from July 1977 to June 1980, the average rate of utilization of the production facilities of an undertaking was 10 percentage points or more below the average rate of utilization of the same facilities of the other undertakings of the Community, during the years 1977, 1978 and 1979, the Commission shall increase the reference production figures for this undertaking to a level which corresponds to a rate of utilization which lies five percentage points below that average rate in the other undertakings:

—Provided the undertaking undertook to comply from July 1977 to June 1980 with the delivery programmes established by the Commission, and

—Provided the programme for this enterprise was fixed taking 1974 as a basis, and

—Provided that during that year all or part of the undertaking's facilities were not on stream.”

In addition to that general possibility of adjustment, Article 14 of Decision No 2794/80 provides for relief to be granted in individual cases.

The first paragraph of that article reads as follows:

“Where the production or delivery restrictions imposed by this decision or its implementing measures entail exceptional difficulties for an undertaking, it may refer the matter to the Commission, providing all appropriate supporting documentation.”

On 5 January 1981 the applicant, Alpha Steel Ltd, which makes and processes steel, received a communication dated 19 December 1980 pursuant to Article 3 (2) of the decision. The reference production for hot-rolled wide and narrow strip, items comprised in Group I in Article 2 of the decision, was stated to be 102993 tonnes, giving, after application of the abatement rate of 27.73 %, a production quota of 74433 tonnes for those products. For crude steel the reference production figure used was 87500 tonnes, which resulted after application of the same abatement rate of 27.73 % in a production quota of 63236 tonnes for the first quarter of 1981. It was expressly stated, as in the previous notification concerning the last quarter of 1980, that the reference production figures had been adjusted pursuant to Article 4 of the decision.

However, the Commission had informed the applicant in a telex message dated 12 December 1980, that is to say, before the quotas at issue in the present proceedings were fixed, that Article 4 (3) of the decision had been wrongly applied, since the delivery programme which had been established for the applicant had not been fixed taking 1974 as a basis. The adjustment to the reference production was therefore based on Article 14.

Dissatisfied with the quotas fixed for the first quarter of 1981, the applicant wrote to the Commission on 19 January 1981 asking for the quotas to be determined on the basis of the total capacity of its works. That was said to be necessary because it was a new undertaking whose production had just come on stream during the reference period used by the Commission and whose expansion had in addition been restricted by the mandatory minimum prices which were imposed at the time.

Even before a decision had been taken on its request, the applicant brought an action before the Court of Justice on 29 January 1981 under the second paragraph of Article 33 of the ECSC Treaty seeking the annulment of the decision of 19 December 1980. It complained that the individual decision contained an inadequate statement of the reasons on which it was based, that the general decision on which it was based, Decision No 2794/80, was unlawful and that Article 4 (3) and Article 14 of that decision had not been applied.

After the commencement of the proceedings the Commission informed the applicant in a letter of 24 February 1981 that it had been in error in applying Article 4 (3). The quotas should have been determined on the basis of a reference production of 63537 tonnes for rolled steel products and 40153 tonnes for crude steel. Pursuant to Article 14 of the general decision, however, the abatement rates for both products would be reduced to zero, so that the quotas would be fixed at the same level as the reference production figures. The decision was to annul and replace the previous decision dated 19 December 1980.

In consequence the applicant amended its claim in the reply, and now seeks the annulment of the defendant's decision of 19 December 1980, as amended on 24 February 1981, and an order requiring the defendant to pay the costs.

The Commission contends that the case need not proceed to judgment and that the question of costs should be settled at the discretion of the Court pursuant to Article 69 (5) of the Rules of Procedure.

My opinion on these submissions is as follows:

I — The question whether the case need proceed to judgment

The view taken by the Commission is that the application has been deprived of its purpose by the withdrawal of the individual decision dated 19 December 1980 and therefore the case need not proceed to judgment. The decision was wholly defective and therefore it was necessary, after weighing the interests of the applicant against those of other undertakings affected by the quota system, to withdraw it. Consequently the applicant's interests were affected either not at all or only slightly because the withdrawal occurred within a reasonable time and the applicant had in any case used only 10 % of its quotas at the time.

Since, in particular, Article 4 of the general decision ought not to have been applied in respect of the applicant and the reference production itself had mistakenly been calculated on the basis of that provision, it was imperative, according to the Commission, to replace the original decision by a wholly new one which differed from the first not only in the statement of reasons on which it was based but also with regard to the provisions which were applied, the reference production on which it was based and the quotas which were allocated. As the decision of 24 February 1981 was not challenged in its own right and the first decision has been withdrawn, there is, in the Commission's view, no need for the case to proceed to judgment.

The applicant, by contrast, would have the decision of 24 February 1981 regarded merely as a rectification of the original decision, supplementing the inadequate statement of reasons and thus giving rise to a fresh calculation of the quotas. The telegram of 12 December 1980, which admittedly related to the last quarter of 1980, made it clear that the provision to be applied in the applicant's case was not Article 4, but Article 14. The letter of 24 February 1981 merely confirmed that finding, which ought logically to have applied to the first quarter of 1981 too. The main damage and the implied unlawfulness of Decision No 2794/80 which are the subject of complaint, as well as the refusal to apply Article 4 of the decision to the applicant and the misapplication of Article 14, have not been remedied. The applicant observes moreover that according to the courts of some of the Member States, there is considerable doubt as to whether it is permissible for an authority to withdraw a defective decision after the initiation of proceedings against it and after the expiry of the limitation period, in order to replace it with a less favourable one.

In my view, however, the question whether or not there is any need for the case to proceed to judgment after the Commission's letter of 24 February 1981 does not depend on the legal nature of that communication. Only if the injury against which the action is directed no longer exists may it be said that there is no need for the case to proceed to judgment. If, like the applicant, we consider the letter of 24 February to be, not a decision in its own right, but merely a rectification of the allocation of quotas for the first quarter of 1981, then the complaints concerning the legality of the general decision, Decision No 2794/80, the failure to apply Article 4 (3) of that decision and the wrongful application of Article 14 remain none the less to be settled.

If, however, we adopt the defendant's view that the letter of 24 February was a new decision replacing the first, then the rephrasing of the applicant's claim in the reply may be regarded as an amendment of its pleadings which, owing to the close legal and factual connection with the original claim, must be considered to be in the interests of expediting the procedure, and therefore admissible.

A further question which may remain open in this connection is whether it was possible for the original decision to be withdrawn and replaced by a more adverse decision when the proceedings were in progress and after the period for bringing an action had expired. The decisive factor is that the letter of 24 February 1981 had legal consequences. Since the decision therefore adversely affected the applicant, the proceedings have not lost their purpose.

In that respect I may add that the following decisions cited by the defendant, in which the Court of Justice held that there was no need to proceed to judgment because the cause of action had ceased to exist, are not relevant: judgment of 11 February 1955 in Case 4/54 Associazione Industrie Siderurgiche Associate (I.S.A.) v High Authority ([1954-56] ECR 91), and judgment of 1 June 1961 in Joined Cases 5, 7 and 8/60 Meroni and Others v High Authority ([1961] ECR 107).

II — Substance

At the hearing the applicant expressly abandoned its first ground of complaint, namely infringement of the Treaty and of an essential procedural requirement inasmuch as the individual decision contained an inadequate or contradictory statement of the reasons on which it was based. I may therefore turn directly to the second ground of complaint, in which, as you are aware, the applicant claims that the general decision, Decision No 2794/80, is unlawful. In support of that claim the applicant pleads infringement of an essential procedural requirement, infringement of the Treaty and misuse of powers.

The applicant contends that the Commission infringed the abovementioned provisions because in introducing the production quotas it failed to consider the need for ancillary action in the field of commercial policy under Article 74 of the ECSC Treaty. Article 58 of the ECSC Treaty contains a mandatory provision, where the conditions listed therein are present, for the establishment of a system of production quotas, “accompanied to the necessary extent by the measures provided for in Article 74”. The two provisions are closely interlinked, both being instruments for controlling crises, and since Article 58 of the ECSC Treaty is mandatory it is imperative to ascertain, before applying it, whether the measures provided for in Article 74 of the ECSC Treaty are necessary. Yet in the present case the need for them ought to have been acknowledged. If the Commission did make such an inquiry its failure to mention the fact constitutes a breach of its obligation under Article 15 of the ECSC Treaty to state the reasons on which the legal measures it adopts are based. The greater the margin of discretion allowed, the more stringent must be the requirements concerning the duty to state reasons, not least in order to facilitate the task of judicial review.

The Commission, which has discussed the substance of the case only in the alternative, argues in reply that sufficient ancillary measures of commercial policy, including action under Article 74 of the ECSC Treaty, have already accompanied the introduction of production quotas. In confirmation of that view the Commission points to the fact that imports of rolled steel products fell considerably in 1980.

The Commission rejects the argument that the statement of reasons was inadequate, there having been no need to refer to Article 74 in the statement of reasons for Decision No 2794/80, which was based on Article 58. The question of the relationship between Article 58 and Article 74 was discussed in detail in Section II.3. of the opinion which I delivered today in Case 258/80 (Rumi). In order to avoid unnecessary repetition I beg the Court to refer to those observations.

Moreover, the applicant has failed to substantiate its claims concerning misuse of powers or manifest failure to observe the provisions of the Treaty.

It would be overstretching the requirements of the duty to state reasons to demand that the statement of reasons include an account of the complex process of balancing different interests; on the other hand, the bald statement that the need for action under Article 74 was considered would be of little service in a review of the manner in which the quotas were fixed.

The judgments of the Court of Justice cited by the applicant, namely the judgments of 20 March 1959 in Case 18/57 J. Nold KG v High Authority ([1957-58] ECR 121) and 15 July 1960 in Joined Cases 36, 37, 38 and 40/59 Geitling and Others v High Authority ([1960] ECR 423), are not relevant to the present case inasmuch as the issue before the Court in those instances was the lawfulness of authorizations granted pursuant to Article 65 (2) of the ECSC Treaty, the granting of which was subject to the fulfilment of the conditions described in that article.

The decisions which do apply, by contrast, are the I.S.A.

judgment cited above and the judgment of 20 March 1957 in Case 2/56 Geitling v High Authority ([1957-58] ECR 3), which make it clear that the only reasons which must be stated are those which induced the Commission to adopt the legal measure in question. Since none of the provisions of Decision No 2794/80 is based on Article 74 of the ECSC Treaty there was no need to refer to that article.

The submission based on the infringement of the Treaty and of an essential procedural requirement must therefore be rejected as unfounded.

The applicant is of the opinion that Decision No 2794/80 is also incompatible with Article 58 (2) of the ECSC Treaty, which states that the High Authority shall determine quotas “on an equitable basis”. It is argued that the establishment of production quotas was not equitable within the meaning of that provision because the quotas were linked to production during the reference period from July 1977 to 1980. Undertakings whose production commenced only in the course of that period, or which had made only partial use of their capacity during the reference period, were thereby discriminated against. By contrast, the scheme unjustifiably favours those undertakings which, for example as part of an employment policy, ignored the principles of profitability to produce excessive quantities of steel, which led ultimately to the crisis in this sector. The more excessive the production of an undertaking proved to be, therefore, the more it was rewarded by quotas linked to that level of production. Such a result could have been avoided, the applicant claims, by making the quotas dependent upon the undertaking's productive capacity.

The Commission points out in reply that the kind of system which was adopted in the present instance was the only one suited to the intent and purpose of the introduction of production quotas, which is to reestablish equilibrium between supply and demand in the steel sector within the Common Market, having due regard to the principles referred to in Articles 2, 3 and 4. A linear decrease in production may best be accomplished by relying on undertakings' previous production, not their capacity. Capacity, which is difficult to define and, in contrast to actual production, relies on estimates, was considered only where concrete figures were either nonexistent or unobtainable.

I share the Commission's view that the method of calculating reference production described in Article 4(1) and (2) of Decision No 2794/80 is not open to objection.

It must be remembered in this context, first, that Article 38 of the ECSC Treaty governs solely the conditions under which a production quota system may be introduced. The detailed structure of such a system is, however, left by the provision to the Commission to determine and in that the Commission enjoys, as with all acts of secondary Community legislation, a wide margin of discretion. The discretion is to be exercised by the Commission in an appropriate manner within the limits laid down by the Treaty, the paramount consideration being that it must adhere to the purpose for which such powers were conferred upon it.

The purpose of the powers conferred under Article 58 of the ECSC Treaty is to tackle the critical decline in demand in the steel sector and to reestablish equilibrium on the market between supply and demand. That aim may best be achieved by reducing the previously excessive production through the imposition of production quotas on the individual steel concerns. The quotas must be determined, according to the words of the Treaty, “on an equitable basis”, taking into account the principles set out in Articles 2, 3 and 4, which include notably the prohibition against discriminatory treatment.

That requirement has been fully satisfied, however, in the rules at issue in so far as they rely on a particular reference production on the part of the undertakings affected by the scheme. If the intention is to reduce actual production it is only logical to make the reduction on the basis of the above criteria. Moreover, application of the abatement rate ensures that the reduction measures affect all undertakings in the same manner, and to the same degree, by comparison with their previous production. That in turn has the consequence that steel production may be reduced uniformly as between undertakings and regions, while from the economic and social aspect, imbalances between different undertakings and areas are avoided.

Such a result could not easily be attained by adopting the applicant's suggestion and determining the quotas by reference to the undertaking's productive capacity. Apart from the fact that such large amounts, unlike actual production figures, must necessarily be based to a much greater extent on suppositions and imponderables, restrictions based on the productive capacity of individual undertakings would not guarantee the desired decrease in production because rates of utilization differ. A quota system calculated on the basis of capacity would therefore do more damage to undertakings with high utilization rates than to those which for some reason make only partial use of their productive capacity. The effect of a measure of that nature would be to reshuffle the market shares held by individual undertakings, thereby interfering with the free play of market forces, and that would have the further consequence of raising the threat of redundancy among workers, contrary to the aim set out in Article 3 (e).

Lastly, the quota system had to be established relatively quickly and could not be expected to provide solutions for the delicate and complex problems faced by the smaller, private undertakings in their efforts to compete with large nationalized undertakings. As I have already pointed out in my opinion on the Rumi case, the problem of State subsidies for the steel industry, the subject of a claim which was raised but not substantiated by the applicant, can only be tackled by measures of a different nature which bear no direct relationship to the quota system. In any case the absence of such measures cannot invalidate the quota system established pursuant to Article 58 of the ECSC Treaty.

Nor can objection be taken to the fact that in the decision the reference period comprises the months during the quarter in question with the highest production for the period between July 1977 and June 1980. As is rightly pointed out in the statement of the reasons on which the decision was based, such a period must be sufficiently recent, on the one hand, to reflect present structures and on the other hand must be sufficiently long to make it possible to select months in which there were no technical incidents or strikes. The purpose of the measure is to enable actual production to be calculated as precisely as possible, and that is sufficient to show that the provision cannot be considered to be defective on the ground that undertakings whose production commenced only in the course of that period are unable to make use of the whole period for the determination of their reference production.

However, should the application of this decision, which like any other rule contains principles of an abstract and generalized nature, entail exceptional difficulties for an undertaking which was not in full production during that period, the hardship clause contained in Article 14 of the decision lays down a procedure which enables relief to be granted on account of the particular circumstances of the case. Since that discretionary provision allows for an exception from the general rule it was logical to make its application dependent on the existence of exceptional difficulties created by the quota system. That undertakings which cannot produce evidence of such difficulties are treated differently is objectively justified and therefore, contrary to the view advanced by the applicant, is not repugnant to the prohibition against discrimination.

Now that it has been established that the quota system in question, which is based on actual production during the reference period, is not as such in conflict with the Treaty there remains to be considered the question whether linking the quota system to the notional reference production calculated in accordance with Article 4 (3) is compatible with the Treaty provisions on which the system is based.

In the applicant's submission, the conditions referred to in that provision were designed to suit a certain small group of steel-producing undertakings and place them in a better position than undertakings which, like the applicant, have also taken part in the voluntary delivery programme but which are unable to meet the conditions imposed owing to the fact that their production commenced after 1974. In consequence the provision is compatible with the Treaty's prohibition against discrimination only if, despite its wording, it is applied to the latter undertakings too. That rule, which enables an undertaking's utilization of its productive capacity to be taken into account, must in any case be permitted to apply under the provisions of Article 14 when utilization which is already reduced owing to voluntary participation in delivery programmes during the reference period is reduced even further by linking the quotas to actual production during the period in question.

The Commission's reply is that the wording of the provision alone prevents it from being applied to the applicant. The purpose of the provision is to compensate for certain disadvantages voluntarily incurred by the undertakings which fulfil the three conditions. There is thus no question of prejudice having been suffered by other undertakings which do not meet those requirements.

It seems to me that on this point too the Commission has the better argument on its side. Here again one cannot ignore the point that there can be no question of discrimination where different treatment is justifiable on objective grounds, having regard in particular to the purpose of the rules in question.

Clearly, however, the purpose of calculating the notional reference production under Article 4 (3), (4) and (5) is to correct any distortion which might arise if reliance were to be placed on the actual production of certain undertakings during the reference period. Undertakings ought not to be penalized in the fixing of their quotas as a result of certain aspects of their conduct which have a positive effect in the light of the general aims of the steel policy.

In order to appreciate the significance of the three conditions which must be fulfilled simultaneously for an undertaking to be allowed to benefit from the provisions of Article 4 (3) of the decision, it is necessary to know that for all undertakings whose production commenced after 1974 capacity was taken into account from the start for the purposes of the delivery programmes because in their case there was no actual production to rely upon. However, undertakings already operating in that year, which was the last normal year and was therefore used as the reference period, were in a different situation. In their case, actual deliveries were taken as the basis for calculations and plant in existence but not yet in operation was not taken into account. The purpose of Article 4 (3) of the decision is in fact to counteract the disadvantages which those undertakings might have suffered under the quota system owing to the fact that they voluntarily accepted delivery programmes knowing that their new capacity was not yet being taken into account.

It is thus evident from the purpose of the provision that there is objective justification for making adjustments to the reference production only for those undertakings which fulfil the three conditions referred to above and which would therefore suffer a disadvantage which other undertakings would not have to bear if the quotas were to be linked to actual production.

Lastly, the Commission cannot be charged with a breach of the prohibition of discriminatory treatment inasmuch as it made provision in the decision for adjustment to be made to the reference production figures only in the circumstances described therein, and not in the circumstances described by the applicant. This raises a point of general application: the aim of the decision, which is to adapt production in accordance with the fall in demand, must not be jeopardized by the allowance of too much latitude in special cases. It must therefore be considered sufficient that the Commission made general provision for adjustments to be made to compensate for such disadvantages as it could foresee might arise in many cases owing to the inherent features of the system. As regards the multifarious difficulties experienced in individual cases, however, the provision of a hardship clause enabling specific factors to be taken into account must suffice.

3. Infringement of Article 14 of the ECSC Treaty and other grounds of complaint

According to the applicant, there are other grounds for questioning the compatibility with the Treaty of Article 4 (3) of the decision. Under that provision the possibility of increasing the reference production is reserved for the undertakings which participated in the voluntary delivery programmes referred to therein, whereas other undertakings which did not take part or which were unable to do so may not benefit from the provision. It is argued that such treatment offends against the principle of nulla poena sine lege, fails to have regard to the fact that in view of Article 14 of the ECSC Treaty the programmes were not binding and, moreover, constitutes a breach of the principle that legitimate expectations must be protected. Article 14 of the Treaty is further infringed by Article 4 (4) of the decision inasmuch as legal consequences are attached thereby to unfavourable opinions which are similarly not binding.

Since, if I am not mistaken, the applicant intends the last-mentioned argument concerning Article 4 (4) of the decision to be considered merely as an example, there is no necessity for examining that argument further in detail. In any case since it was raised for the first time in the reply it must be rejected as being out of time. Furthermore, such a complaint must be inadmissible because neither the communication of 19 December 1980 nor that of 24 February 1981 was based on the provision complained of and therefore they do not represent applications of that general rule.

As to the submission that Article 4 (3) of the decision is incompatible with Article 14 of the Treaty and other fundamental principles of law, the reply to that has already been supplied in my remarks about the purpose of the provision. I concur with the Commission in considering that compensating for the disadvantage which the undertakings covered by that provision had borne and which would have been reflected in the quota system cannot be considered a sanction against other undertakings which had made no such sacrifice. For the same reason it is inappropriate to speak of a breach of the principle of nulla poena sine lege, which belongs to the field of criminal law.

As to the applicant's claim that there has been a breach of the principles governing acts adopted by Community institutions, described in particular in Article 14 of the Treaty, it may be conceded for the applicant that the action taken by the Commission in drawing up delivery programmes is intended to provide guidance, which undertakings are, in principle, at liberty to heed or disregard. The provision for adjustment contained in Article 4 (3) of the decision is not incompatible with the nonbinding nature of those programmes. The provision merely establishes the consequences which are to flow from the disadvantage in fact incurred in following the programmes. For the same reason there can be no question of a breach of the principle that legitimate expectations must be protected, for undertakings which did not participate in the programmes in question and therefore suffered no disadvantage could scarcely expect to receive more favourable treatment than those which did accept such disadvantages.

In addition to the arguments dealt with so far, which concern the lawfulness of the general decision, the applicant raises doubts as to whether the two communications it received are compatible with the general decision on which they were based. In its opinion the Commission ought logically to have applied Article 4 (3) of the decision in its case since it too had used its new plant for the Commission's delivery programmes during the reference period in question. In the applicant's particular case, however, 1974 could not be the relevant year. Moreover, capacity was in fact relied upon because in that year production was the same as capacity.

However, as we have already seen, the applicant's claim cannot be reconciled with either the wording or the purpose of that provision. I need only mention here that the programmes described therein are linked neither to the production nor to the capacity of the undertakings but to deliveries. Also, as the Commission rightly points out, the applicant fails to fulfil even the first condition because it participated in delivery programmes not during the reference period mentioned in Article 4 (3) but only from the third quarter of 1978.

That was why the Commission rectified the legal basis on which it relied in its communication of 19 December 1980. In my view, that rectification, which was dated 24 February 1981, is to be considered in substance as withdrawing the defective decision of 19 December 1980 and issuing a new individual discretionary decision based on Article 14 of the general decision. One of the considerations which bears out that view is that, in contrast to a discretionary decision based on Article 14, an increase in reference production pursuant to Article 4 (3) of the decision requires no exercise of discretion on the part of the Commission but results from the straightforward application of the criteria laid down therein. The essential nature of a measure of that kind based on straightforward application of the law cannot be altered by adducing fresh grounds for it after the event.

The revocation of a defective administrative measure giving rise to individual rights is permitted under the laws of all the Member States and therefore under Community law, as the Court held in a judgment of 12 Julv 1957 in Joined Cases 7/56 and 3 to 7/57 Dineke Algera and Others v Common Assembly of the European Coal and Steel Community ([1957-58] ECR 39), for “the absence of an objective legal basis for the measure affects the individual right of the person concerned ...”.

In the present case, the revocation is justified on the ground that the public interest in having the defective measure revoked (the applicant undertaking would be unjustifiably favoured to the detriment of the general quota system) outweighed the applicant's legitimate interest in its retention, since during the quarter in question it had exhausted only 10o/o of the quotas allocated to it. There would be grounds for protecting the applicant's legitimate expectations only in so far as it had had good reason to rely on the lawfulness of the communication of 19 December 1980, which was not the case since the telex message of 12 December 1980 already enabled it to assume, as its subsequent conduct shows that it did, that the communication was defective. Similarly there is no reason to recognize a legitimate expectation that the administration would not adopt further, more onerous measures.

As regards the conditions for exercising the right of revocation, the Court confirmed as early as in the Algera case, and on the basis of an exhaustive review of comparative law, that in principle unlawful acts of the administration may be revoked “at least within a reasonable period of time”. The judgment contains an express reference, in response to an objection raised by the applicant, to the fact that French law requires that “the withdrawal of the illegal measure should be pronounced before the expiry of the time-limit for instituting legal proceedings and, if proceedings have been instituted, before judgment is delivered”. In this case, however, the decision of 19 December 1980, which as a result of its being contested had not become final, was withdrawn in the course of the proceedings, that is to say before judgment was given.

Since at that time the applicant had in any case exhausted a mere fraction of its quotas, even with reference to the adjusted quotas, it is impossible to maintain that the period was not reasonable.

The foregoirg discussion also indicates, finally, the reply to the applicant's last ground of complaint in which it submitted that the Commission misused the powers granted to it under Article 14 of the decision in not increasing the actual production figures in accordance with Article 4 (3) of the decision. Suffice it to say here that, as the Commission points out, that provision is not intended to substitute productive capacity for actual production as the point of reference in the general decision, which would be contrary to the other rules. Rather, the Commission must exercise its powers properly in the sense that it must, on the one hand, take account of the purpose of the general decision, which is to reduce actual production, and, on the other hand, have regard for the difficulties which might thereby be created in individual cases. It certainly cannot be reproached on the ground that, realizing that application of the prescribed abatement in the applicant's case would have resulted in a rate of utilization of 17.6%, it recognized the existence of exceptional difficulties and therefore refrained from applying any abatement at all. On the other hand, however, there was no reason for the Commission — quite apart from the question whether Article 14 permits such action — to make the reference production higher than the actual production in view of the applicant's low utilization of earlier quotas.

It may therefore be concluded that the Commission interpreted Article 14 of the decision correctly in its communication of 24 February 1981 and that there is no ground for claiming that it ought to have applied Article 4 (3).

III — Costs

The question of costs must therefore be decided on the basis that the application is unfounded. Regard must also be had, however, to the circumstance that the application directed against the notification of 19 December 1980 would have been successful, at least in so far as the inadequacy of the statement of reasons on which that communication was based is concerned. Although it is not necessary to declare that the case need not proceed to judgment as a result of the amendment of the application, it seems to me appropriate, in accordance with the basic principle in Article 69 (5) of the Rules of Procedure, to order the defendant to pay one-third of the costs in spite of the fact that it was successful in its submissions.

Accordingly, I propose that the application be dismissed as unfounded and the applicant be ordered to bear two-thirds of the costs and the defendant one-third.

—

(1) Translated from the German.