OPINION OF MRS ADVOCATE GENERAL ROZÈS

DELIVERED ON 4 MAY 1983 (1)

Mr President,

Members of the Court,

The case in which I am delivering my opinion is an action brought by the company Usines Gustave Boël and the company Fabrique de Fer de Maubeuge against the Commission of the European Communities. It seeks a declaration that the Commission decision of 26 November 1982 on a procedure for the application of Article 14 of Decision 1696/82/ECSC of 30 June 1982 is void.

I — The facts are as follows:

In application of Article 58 of the Treaty establishing the European Coal and Steel Community the Commission declared a state of manifest crisis and on 31 October 1980 adopted Decision 2794/80 establishing a system of production quotas for steel for undertakings in the coal and steel industry.

Since the system is familiar to the Court I shall not set out in detail the conditions of its operation and shall refer to the opinion of Mr Advocate General Reischl of 23 February 1983 in the Klöckner case. (2)

To ensure the effectiveness of the system any exceeding of the quota is penalized by a fine fixed on the basis of each tonne produced in breach. Nevertheless if the imposition of quotas causes certain undertakings, by reason of their particular situation, exceptional difficulties, the Commission may make ‘suitable adjustments’ at the request of those concerned.

The system was supplemented by a monitoring system periodically extended (3) and it is Commission Decision 1696/82/ECSC with which the present case is concerned.

Article 9 (1) thereof provides that the Commission must fix for each quarter the abatement rates for establishing the production quotas and the part of the quotas which may be delivered in the common market.

On the basis of studies conducted in conjunction with the undertakings and their associations the Commission thus by Decision 2585/82 of 22 September 1982 laid down the abatement rates for establishing the production quotas for the fourth quarter of the year. Those rates were as follows:

Category la — 44 (for the previous quarter: — 37)

Category lb — 42 (for the previous quarter: — 38)

Categoiy Ic —16 (for the previous quarter: — 13)

Category Id + 30 (for the previous quarter: + 31).

Pursuant to Article 9 (2) of the aforesaid decision the Commission on 1 October 1982 notified the company Usines Gustave Boel, La Louvière (Belgium), and its French subsidiary, the company Fabrique de Fer de Maubeuge, Louvroil (Nord), of their annual and quarterly reference production and reference quantities as well as their production quotas and the part of those quotas which might be delivered in the common market.

The Boël group specializes in the manufacture of plate products coming within Category I, hot-rolled wide and narrow strip rolled on specialized mills. (4)

Category I has four subcategories (Categories la, lb, Ic and Id) covering products, a detailed list of which is to be found in Annex I to the decision, the terminology used by the decisions establishing the quotas is fairly imprecise : Sometimes the word “category” and sometimes the word “group” or “derivatives” is used. Since Decision 1696/82 refers to “Categories la to Id” I shall adopt that terminology.

The Boël group also manufactures wire rod (Category IV) and reinforcing bars (Category V), but those products are not in issue in this case.

Let me add that the Commission decision of 31 March 1981 authorized Boël to enter into specialization and coordination agreements with two other Belgian steel-producing undertakings (Forges de Clabecq S.A. and Fabrique de Fer de Charleroi S.A.) to constitute a “focal point for independents”.

Under that agreement it undertook inter alia not to produce on its wide strip mill heavy and medium plates which could be rolled at less expense on Clabecq's mill. The three partners to that agreement are over-equipped for hot-rolled products and although they are established in Belgium they sell more than 75% of their production in the other countries of the Community.

Nevertheless Boël exceeded by 2581 tonnes the production quota allotted to it for the second quarter of 1981 in respect of products of Category I. By decision of 24 November 1982 the Commission imposed a fine of 193575 European currency units (BFR 8787453) for breach of Decision 2794/80.

II — Pursuant to Article 14 of Decision 1696/82 Boël (letter of 6 October 1982) and Fabrique de Fer de Maubeuge (letter of 2 November 1982) requested a “suitable adjustment” to their reference production and/or reference quantities for Category I for the fourth quarter of 1982.

By telex message of 26 November 1982 the Director of the Directorate General of the Domestic Market and Industrial Affairs and by letter of 3 December 1982 from the Director General thereof the Commission rejected the request for a supplementary adjustment in so far as it related to “products of Category Ic which are not subject to an abatement rate of at least 20% for the current quarter”.

Category Ic, the abatement rate for which was 16%, covers hot-dipped galvanized sheet, cut or coiled, and galvanized sheet for the production of Category Id products on other Community undertakings.

In a joint action brought on 13 December 1982 Usines Gustave Boël and Fabrique de Fer de Maubeuge seek a declaration that the Commission decision of 26 November 1982 is void.

After the Commission's defence was filed the applicants waived the right to lodge a reply and the Commission agreed that the case should be given priority pursuant to the second subparagraph of Article 55 (1) of the Rules of Procedure. The applicants cited as “special circumstances” the fact that Fabrique de Fer de Maubeuge had had to stop production and its galvanization plant as from the second half of November 1982.

III — In support of their action the applicant companies allege infringement of Article 14 of Decision 1696/82 and breach of Article 58 of the Treaty.

Article 14 is worded as follows:

“If, by virtue of the scale of the abatement rates set in respect of a given quarter, the quota system creates exceptional difficulties for an undertaking, the Commission shall make suitable adjustments to its reference production and/or reference quantities for the category in question, provided that the undertaking makes an application to this effect during the first two months of the relevant quarter in the following instances:

The total reference production for Categories la to Id amounts to less than 100000 tonnes a year and at least 75% relates to products where the abatement rate for one or more of these categories exceeds 20%; or

The total reference production for Categories IV, V and VI amounts to less than 100000 tonnes and the abatement rate for one or more of these categories exceeds 20%.”

The applicants state that perusal of the wording reveals three conditions: the first relating to the existence of exceptional difficulties ecountered by the undertaking as a result of the scope of the abatement rates, the second being a total reference production of Categories la to Id of less than 1000000 tonnes a year and the last that at least 75% of the reference production relates to products where the abatement rate for one or more of the categories exceeds 20%.

They point out that Maubeuge has had to stop production and that in rejecting the request for an adjustment on the sole ground that the products of Category Ic were not subject to an abatement rate of at least 20% for the fourth quarter the Commission added a condition which is not in Article 14 of Decision 1696/82.

They consider that the abatement rates the scope of which may justifiy suitable adjustment refer to Categories la to Id as a whole without taking account of the rate for each category individually. To be applicable Article 14 simply requires that the total reference production of Categories la to Id be made up of 75% at least of products whose abatement rates in one or more categories exceed 20%.

I do not agree with that analysis but emphasize the ambiguity of the drafting of Article 14 which in referring to “category in question” does indeed cause difficulties of interpretation.

I note that Boël asked for an increase in the quotas pursuant to Article 14 by letter dated 20 August 1982 in which is stated that it fulfilled “the two conditions, namely, an annual production of products of Categories la to Id inclusive amounting to less than 1000000 tonnes a year and 75% thereof in categories where the abatement rate for one of these categories at least is more than 20%”.

For the first indent of Article 14 to apply it is necessary in the first place for the total reference production of Categories la to Id to be less than 1000000 tonnes a year.

That is the case with the applicants whose production amounts to 876988 tonnes (497460 + 198052 + 176264 + 5212).

In the second place it is necessary to inquired whether at least 75% of that production relates to products falling within one or more of the categories whose abatement rate exceeds 20%.

That is also the case; the products of Categories la (497000 tonnes) and lb (198052 tonnes) which represent together more than 75% of the annual production (695512 is more than 75% of 876988, that is 657512), have respectively an abatement rate of 44 and 42%.

In those circumstances because of the scope of the rates of Categories la and lb of more than 20%, the quota system is considered to “create exceptional difficulties” for the undertaking and the. necessary conditions are satisfied for the Commission to make a suitable adjustment of the reference products and quantities in those two categories.

It is common ground that the abatement rate of Category Ic is 16%, that is, less than 20%, and cannot give rise to suitable adjustment.

In this case the expression “pour les catégories en question” (for the categories in question) refers to each of the Categories la, lb, Ic and Id. It may have misled the applicants and it would have been clearer to refer to “une ou plusieurs des catégories en cause” (for example, in English “for the category in question”). But that ambiguity of style cannot nevertheless affect the general sense of the provision at issue.

In the second place the applicants claim that their interpretation alone accords with Article 58 of the ECSC Treaty which is the basis of the quota system.

On the contrary I think that the interpretation which I propose in no way conflicts with Article 58 of the ECSC Treaty which provides for the determination of quotas “on an equitable basis, taking account of the principles set out in Articles 2, 3, and 4” (first subparagraph of Article 58 (2)).

The system established in view of the period of manifest crisis obviously constitutes a derogation “from the normal rules governing the working of the common market, which are based on the principle of the market economy” as the Court held in the judgment in the Valsabbia case. (5) During the course of its operation it appeared that application of the system risked creating exceptional difficulties for an increasing number of undertakings; for that reason more and more adjustments were made to the system. Those exceptions do not however prove that the situation has become normal and they are to be explained solely on grounds of necessity. They must not be unreasonably widened for otherwise there is a risk of compromising the working of the system and delaying return to a more normal situation.

In the aforesaid judgment the Court took care to point out that:

“The anti-crisis policy in the iron and steel sector is based on the fundamental principle of solidarity between different undertakings”. (6)

The first indent of Article 14 allows a relaxation in the quota system in so faias it provides by way of exception

for an adjustment in respect of products in Categories la to Id. Such adjustment however is subject to specific conditions. One of the conditions is that the abatement rate on the products exceeds 20%. Even though it is a relaxation the provision is part of the general system continued by Decision 1696/82.

So interpreted and applied the provision observes the objectives defined in Article 58 which correspond to the economic and social policy adopted by the Commission.

In those circumstances, in basing the refusal of the applicants' request on the ground that the adjustment provided for in Article 14 can be made only in respect of the category or categories to which the products making up the percentage (75%) referred to in the first indent belong, that is to say the category or categories whose abatement rate exceeds 20%, the Commission correctly applied the provision.

In my opinion the application should be dismissed and the applicants ordered to pay the costs.

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(1) Translated from the French.

(2) Case 244/81.

(3) Decision 1831/81 of 24 June 1981; Decision 1832/81 of 3 July 1981 including reinforcing bars and merchant bars in the quota system; Decision 533/82 of 3 March 1982; Decision 1696/82 of 30 June 1982; Decision 1698/82 of the same date adjusting the abatement rates for Category V products for the third quarter of 1982 in respect of certain undertakings; Decision 2751/82 of 6 October 1982.

(4) Article I of Decision 1696/82.

(5) Judgment of 18 March 1980 in Joined Cases 154, 205, 206, 226 io 228, 263 and 264/78, 39, 31, 83 and 85/79 [1980] ECR 907, paragraph 80 at p. 1008.

(6) The aforesaid judgment in the Valsabbia case, [1980] ECR at p. 1004, paragraph 59.