(i)

declare the third indent of Article 1(2) of Decision No 30/53, as amended by Commission Decision No 1834/81/ECSC, void on the ground that the Commission misused its powers by extending to matters of pricing a definition borrowed from the rules on competition;

(ii)

declare individual Decision No 5462 of 2 May 1985 void on the grounds of illegality and misuse of powers since the Commission wrongly deemed SSK to be a ‘selling agency’ of Laminoirs;

(iii)

declare the same decision void on the ground that the Commission did not explain the criteria for determining the amount of the guarantee to be blocked.

(i)

Was the Commission authorized under the provisions of the ECSC Treaty on prices, Article 60 et seq., to extend the liability of producer undertakings to the practices of their distributors which effect ‘direct sales’, when those distributors are controlled by the producer undertaking (Section B)?

(ii)

In the present case, was the Commission entitled to describe SSK as a ‘selling agency’ of Laminoirs/Usinor within the meaning of Decision No 30/53 (Section C)?

1.

First of all, it maintains that the context of Article 66 of the ECSC Treaty is such that, in that context, a very broad definition of ‘control of an undertaking’ is perfectly legitimate. Since the undertakings participating in an illegal concentration are all necessarily at fault, ‘the legislature was entitled to define the control of one undertaking by another in a broad context of contractual relations, without there being any need for one undertaking to have power over the other’. ( 7 )

The applicant argues that the situation is different in the case of Article 60 since pricing infringements can be committed by a single undertaking without another undertaking being involved; another undertaking cannot be accused of those infringements unless it actually had the legal means to prevent the first undertaking from committing them.

The first point to be noted in this regard is that the system established by the Commission is not only based on the existence of ‘a broad context of contractual relations’ between two undertakings.

The situation envisaged by the Commission is where a producer undertaking involves in its direct sales a distributor undertaking which it controls (see the fourth recital in the preamble to Decision No 1834/81/ECSC).

In the first place, therefore, direct sales must take place, that is to say that the goods must be dispatched by the producer undertaking direct to the customer of the distributor undertaking.

Secondly, a further condition must be fulfilled.

One is led to the conclusion that Decision No 1834/81/ECSC incorporated not only the criteria of ‘rights or contracts’ contained in points (1) to (5) of Article 1 of Decision No 24/54 but also the condition set out in the introduction to that article, namely that the ‘rights or contracts’ must, ‘either separately or jointly, and having regard to the considerations of fact or law involved, ... make it possible to determine bow an undertaking shall operate as regards production, prices, investments, supplies, sales and appropriation of profits’.

The Commission is therefore required to consider, case by case, in the application of Decision No 30/53, whether the distributor undertaking may, as far as its pricing or sales policy is concerned, be regarded as an extension of the producer undertaking.

It seems difficult to deny that the five situations defined in Article 1 of Decision No 24/54 may confer—at least in certain circumstances — such a power on the producer undertaking.

It is thus hard to see how the Commission is supposed to have misused its powers in adopting in connection with Decision No 30/53 the ‘elements of control’ defined in Decision No 24/54, which, I repeat, does not provide for automatic determinations but for an examination of each individual case.

I should also point out, as the Commission rightly does, ( 8 ) that the applicant is also mistaken in arguing that the elements of control defined in Decision No 24/54 do not necessarily fit into ‘a broad context of contractual relations’; point (2) of Article 3(1) provides that control may be exercised by persons or undertakings who, while not being holders of rights or entitled to rights under the contracts referred to in Article 1, nevertheless have power to exercise the rights deriving therefrom.

Finally, and as far as necessary, I would point out that in a previous case ( 9 ) the same argument was used ( 10 ) — albeit in a different context — in support of an application to the Court to have the Commission's refusal to increase the applicant's quotas for certain products declared void. The Court rejected that argument. It stated that in selecting, as the entity to which the quota system applied, a group of undertakings as referred to in Article 66 of the ECSC Treaty, the Commission had not exceeded the discretionary power conferred on it by Article 58 of the ECSC Treaty and in no way undermined the validity of the definition of an undertaking contained in Article 80 of the ECSC Treaty (paragraph 7 of the decision).

2.

The second reason put forward by the applicant is that Decision No 18 34/81/ECSC could be adopted only in conformity with the procedure laid down in Article 95 of the ECSC Treaty, since the Treaty, in Articles 60 and 61 dealing with prices, does not provide for the obligations incumbent on undertakings to be extended to other undertakings under their control.

Although the last subparagraph of Article 60(1) expressly provides that the High Authority may define the practices covered by the prohibitions in Article 60(1), that authorization refers only to the nature of the practices, not to those who engage in them.

That interpretation is borne out, in the applicant's view, by the wording of Article 63. That article, which likewise appears in the chapter on prices, provides in paragraph 2(b) as follows:

‘undertakings shall be held responsible for infringements of this obligation by their direct agents or by commission agents acting on their behalf’.

Since no authorization is given for extending the list in that article, it is exhaustive and incapable of extension except by resorting to the procedures laid down in Article 95, which the Commission did in the case of independent dealers in adopting Decision No 1836/81/ECSC, ( 11 ) which was adopted on the same day as Decision No 1834/81/ECSC.

The force of that argument can be appraised only with reference to the context and the purpose of the decision in question.

It should first be noted that Decision No 30/53 is based not only on Article 60 but also on Article 63(2).

Even in its original version of 2 May 1953, Decision No 30/53 covered selling agencies generally, since it provided in Article 7 that ‘undertakings shall be held responsible for infringements of this obligation [i.e. the obligation to comply with the rules set out in Articles 2 to 6 of the decision] by their direct agents, selling agencies or commission agents’.

At that time selling agencies were therefore assimilated, as it were, to direct agents or commission agents, which are mentioned in Article 63 (2) (b).

Decision No 19/63 of 11 December 1963 ( 12 ) then defined that concept of a selling agency in the way indicated in the first two indents of the new Article 1(2) of Decision No 30/53.

The reasons for that further clarification were given in the third recital of the preamble to Decision No 19/63. ( 13 )

In Article 8 of Decision No 30/53, as amended by Decision No 19/63, the High Authority introduced the concept of ‘middlemen’, distinguishing two sub-categories. The first category includes agents and the second commission agents. The applicant has not challenged the legality of that decision which is not, however, based on Article 95 of the ECSC Treaty but on Articles 4, 60 and 63(2) of the Treaty.

Finally, as part of the crisis measures which it was induced to adopt in the steel sector, the Commission considered it necessary to take stronger action on the sale prices of steel products and adopted Decision No 1834/81/ECSC (based on Article 60).

The reasons for introducing a new category of selling agency in Decision No 30/53 (third indent of Article 1(2)) were stated in the fourth and fifth recitals of the preamble to Decision No 1834/81/ECSC:

‘Whereas over the last few years, in order to widen the distribution of their products, a large number of producer undertakings have taken over, directly or indirectly, control of distributor undertakings which do not necessarily distribute primarily the production of the undertakings which control them; whereas experience has shown that producer undertakings can avoid the prohibitions of discrimination concerning them simply by involving in their direct sales the distributor undertakings which they control;

Whereas producer undertakings should be subject to the obligations deriving from Decision No 30/53 in respect of direct sales in all cases when they involve the distributor undertakings which they control’.

The Commission therefore considers in effect that the direct sale by a producer undertaking of its products remains a sale effected by that undertaking, even when a selling agency acts as a middleman, so long as the producer undertaking is able to exercise control over the pricing policy of the selling agency in question.

The clear aim of the further amendment of Decision No 30/53 was therefore to ensure that Article 60 remained effective by preventing producer undertakings from being able to evade their obligations by artificial means.

As the Court has stated on several occasions, ‘writers and case-law agree in recognizing that the rules established by a treaty imply the principles without which these rules cannot effectively or reasonably be applied’. ( 14 )

In any event, it cannot be argued that this is a ‘case not provided for in [the] Treaty’ mentioned in Article 95.

The basic obligation whose observance must be ensured is clear from the Treaty itself (‘Pricing practices contrary to Articles 2, 3 and 4 shall be prohibited ... ’ — first sentence of Article 60).

The power to define in more detail ‘the practices covered’ by the prohibition laid down in Article 60(1) is conferred on the Commission by the last sentence that provision.

The principle that undertakings are liable for infringements of pricing rules committed by middlemen who are under their control may also be inferred from the Treaty, namely from Article 63(2)(b), even though the actual wording of that article refers only to ‘direct agents or ... commission agents acting on their behalf’.

Finally, it may be argued that, by empowering the Commission to define ‘the practices covered’ by the prohibition laid down in Article 60(1), the ECSC Treaty also conferred on it the power to define those practices by reference to certain special rules, according to which producer undertakings may be deemed to engage in them provided that ultimate responsibility for the misconduct may be imputed to them.

It was therefore unnecessary to resort to Article 95.

The situation changes completely when the true offenders are not the producer undertakings but distributor undertakings over which they have no control.

Since ‘the steel market constitutes a whole in which dealers play an important role, in view of the fact that more than half of the steel marketed in the Community, either in direct sales or ex-stock, including material imported from non-Community countries, passes through their hands’, the Commission decided that ‘any action intended to affect prices must involve not only producers but also dealers’ (fifth recital in the preamble to Decision No 1836/81/ECSC). Accordingly, on the day on which it adopted Decision No 1834/81/ECSC, the Commission addressed Recommendation No 1835/81/ECSC ( 15 ) to the Member States in order to oblige them to take the requisite measures to ensure that ‘undertakings engaged in the distribution of steel [i.e. independent distributors not controlled by a producer undertaking] observe rules on prices and conditions of sale similar to those imposed on the production undertakings by Article 60 of the Treaty and the implementing decisions taken pursuant thereto’ (third recital of the preamble to Recommendation No 1835/81/ECSC).

For that purpose the Commission exercised the power expressly conferred on it by Article 63(3) of the ECSC Treaty.

However, realizing that a certain amount of time would be needed by the Member States to implement that Recommendation, the Commission meanwhile adopted Decision No 1836/81/ECSC directly imposing those obligations on distributor undertakings (see the last recital of Recommendation No 1835/81/ECSC).

In order to do so, the Commission had to apply the provisions set out in the first paragraph of Article 95 because, as it stated in the sixth recital of the preamble to Decision No 1836/81/ECSC, ‘the Treaty makes no provision for this case’, since, by virtue of Article 80, Article 60 applies only to undertakings engaged in production.

Although set in the same context, the two decisions therefore have different objectives which justify the reference to two separate legal bases; whereas Decision No 1836/81/ECSC extends the ambit of the pricing rules beyond Article 60 so as to cover (independent) distributor undertakings, Decision No 1834/81/ECSC merely defines, within the confines of Article 60, the liability of producer undertakings for the acts of their selling agencies by defining the latter more precisely (for the reasons set out in the fourth recital, quoted above).

The Community legislature was aware of that distinction to the point of expressly excluding ‘selling agencies as defined in Decision No 30/53’ from the scope of Decision No 1836/81/ECSC (see third indent of Article 1(1) thereof) and from Recommendation No 1835/81/ECSC (third indent of Article 2(1) thereof).

(i)

the existence of ‘elements of control’ within the meaning of Decision No 24/54;

(ii)

the actual occurrence of direct sales.

1.

As regards control and the possibility for Laminoirs to determine how SSK shall operate as regards prices or sales, the following points should be made.

The Commission believes that in the exclusive distribution agreement concluded on 30 June 1969 between Laminoirs and SSK it can detect the ‘element of control’ described in point (5) of Article 1 of Decision No 24/54.

That provision refers to ‘contracts made with an undertaking concerning the whole or an important part of its supplies or outlets, where the duration of those contracts or the quantities to which they relate exceed what is usual in commercial contracts dealing with those matters’.

It appears that:

The applicant does not deny the existence of any of those elements but qualifies their importance and significance. It maintains that the contract does not exceed what is usual in commercial contracts dealing with those matters, either in terms of quantity or in duration, and that in the absence of participation by the producer undertaking in either the capital or the management of the distributor undertaking there is no control of SSK by Laminoirs.

The applicant seeks to interpret each of the elements listed above in such a way as to deny their relevance in the attempt to link them together as evidence suggesting that SSK is indeed the selling agency for Laminoirs within the meaning of Decision No 1834/81/ECSC. Thus it is argued that the trade practices and the clauses set out above are quite normal in dealings between supplier and distributor.

I take the view, however, that the very existence of all those elements, irrespective of their raison d'être or whether they are normal or not and of the extent to which they were applied, is sufficient to satisfy the conditions laid down in Decision No 1834/81/ECSC. Those elements are precisely of such a nature as to prove such close control of the distributor undertaking by the producer undertaking that the former may be considered to be really acting on behalf of the latter. In order to be relevant, those elements do not necessarily have to be accounted for by a specific or, as it were, pre-established relationship, such as belonging to a group of undertakings or the participation of one undertaking in the management or administration of the other, as the applicant maintains.

The latter circumstances fall respectively under point (1) of Article 1 of Decision No 24/54 (‘Ownership or the right to use all or part of the assets of an undertaking’) and the second indent of Article 1(2) of Decision No 30/53 (as amended), which refers to ‘distributor undertakings ... administered by a producer undertaking ... ’.

However, I have already concluded that the taking into consideration, as an element of control, of a contract which meets the criteria set out in the introduction and point (5) of Article 1 of Decision No 24/54, could not be considered illegal or a misuse of powers.

Finally, during the hearing which the Commission accorded to the representatives of Laminoirs on 16 April 1985, one of those representatives stated that ‘if Laminoirs makes a direct sale it knows the price charged to the customer. The price is agreed since SSK lives on the commission paid by Laminoirs’ (see draft minutes of 8 May 1985 attached to the application; in its observations of 29 May 1985 Laminoirs did not dispute that minute).

To sum up, it is therefore possible to conclude from all the elements mentioned above that it is possible for Laminoirs to determine how SSK shall operate as regards prices or sales, as is required by Article 1 of Decision No 24/54.

2.

As far as the existence of ‘direct sales’ is concerned, first of all, Decision No 30/53, as amended by Decision No 1834/81/ECSC, defines them in the following way:

‘A sale is “direct” when, under contracts of sale concluded between the producer undertaking and the distributor undertaking on the one hand and between the distributor undertaking and its customers purchasing the products on the other, the products are shipped directly from the producer undertaking to the customer of the distributor undertaking or in accordance with the instructions of the customer.’

In this case the existence of ‘direct sales’ was explicitly acknowledged by Laminoirs in a letter of 30 January 1985 and during the hearing on 16 April 1985.

Their existence is also proved by the fact that SSK does not have a warehouse, so that Laminoirs' products are always despatched by Laminoirs direct to SSK's customers.

Finally, points (iv) to (vii) in part C.l above also tend to confirm the existence of that sales system.

No conclusion may be drawn from the fact that the definition of ‘direct sales’ is the same in Decision No 30/53, as amended, as it is in Decision No 1836/81 /ECSC, which is concerned with dealers (Article 6(2)); the definition constitutes an objective concept which cannot vary according to the status of the contracting parties.

What matters is that, even in the case of direct sales, dealers are not in the same situation of dependency as selling agencies within the meaning of Decision No 30/53.

In conclusion, I am therefore of the opinion that the Commission was, in the light of the foregoing, entitled to take the view that SSK was the ‘selling agency’ for Laminoirs within the meaning of the third indent of Article 1(2) of Decision No 30/53, and in the circumstances did not therefore misuse its powers in adopting individual Decision No 5462 of 2 May 1985.

(1)

Dismiss as inadmissible the claim that it should declare void the third indent of Article 1(2) of Decision No 30/53, as amended by Decision No 1834/81/ECSC;

(2)

Dismiss as unfounded the claim that individual Decision No 5462 of 2 May 1985 should be declared void; and

(3)

Order the applicant to pay the costs.