61982J0136

1 . MEASURES ADOPTED BY THE INSTITUTIONS - METHOD OF PREPARATION - ECSC SYSTEM OF PRODUCTION QUOTAS - ASSENT OF THE COUNCIL - REQUIREMENTS AS TO FORM - JOINT EXAMINATION BY THE COMMISSION AND THE COUNCIL OF A DETAILED DRAFT DECISION - DUTY - NONE

( ECSC TREATY , ART . 58 ( 1 ), FIRST SUBPARA .)

2 . ECSC - PRODUCTION - QUOTA SYSTEM FOR STEEL PRODUCTION - DETERMINATION ON AN EQUITABLE BASIS - TAKING INTO ACCOUNT OF THE ACTUAL PRODUCTION OF UNDERTAKINGS - WHETHER PERMISSIBLE

( ECSC TREATY , ART . 58 ( 2 ); GENERAL DECISION OF THE COMMISSION , DECISION 1831/81 , ART . 6 ( 1 ) ( B ))

3 . ECSC - PRODUCTION - QUOTA SYSTEM - PURPOSE - GUARANTEE OF MINIMUM PRODUCTION FOR A GIVEN UNDERTAKING TO THE DETRIMENT OF OTHERS - DUTY OF THE COMMISSION - NONE

( ECSC TREATY , ART . 58 )

4 . MEASURES ADOPTED BY THE INSTITUTIONS - STATEMENT OF REASONS - DUTY - SCOPE

( ECSC TREATY , ART . 15 , FIRST PARA .)

5 . ECSC - PRODUCTION - QUOTA SYSTEM - PURPOSE - CORRECTION OF THE EFFECT OF ILLEGAL PUBLIC AIDS - RECTIFICATION - DUTY OF THE COMMISSION - NONE

( ECSC TREATY , ART . 58 )

6 . ECSC - PRODUCTION - QUOTA SYSTEM - SCOPE - RESTRICTION OF SALES OPPORTUNITIES ON THE COMMUNITY MARKET - RESTRICTION OF EXPORT OPPORTUNITIES

( ECSC TREATY , ART . 58 )

7 . ECSC - PRODUCTION - QUOTA SYSTEM - TAKING INTO ACCOUNT OF TRADE WITH NON-MEMBER COUNTRIES - DISCRETIONARY POWER OF THE COMMISSION - SCOPE

( ECSC TREATY , ART . 58 )

1 . THE POWER TO ESTABLISH A SYSTEM OF PRODUCTION QUOTAS IN THE CASE OF A MANIFEST CRISIS LIES , UNDER ARTICLE 58 OF THE ECSC TREATY WITH THE COMMISSION , SUBJECT TO THE CONDITION THAT IT MAY NOT ACT EXCEPT WITH THE ' ' ASSENT ' ' OF THE COUNCIL .

IN LAYING DOWN THAT FORM OF CONSULTATION BETWEEN THE COMMISSION AND THE COUNCIL , ARTICLE 58 DID NOT DETERMINE ITS DETAILED ARRANGEMENTS . IN THOSE CIRCUMSTANCES , IT IS A MATTER FOR THE TWO INSTITUTIONS TO PROVIDE , BY COMMON CONSENT AND IN ACCORDANCE WITH THEIR RESPECTIVE POWERS , FOR THE FORM WHICH THEIR COOPERATION SHALL TAKE . THE REQUIREMENTS OF ARTICLE 58 ARE THUS SATISFIED IF SUCH COOPERATION CULMINATES IN THE COUNCIL ' S ASSENTING TO THE ' ' QUOTA SYSTEM ' ' WHICH THE COMMISSION PROPOSES TO SET UP , WITHOUT ITS BEING NECESSARY TO REQUIRE THE TWO INSTITUTIONS TO EXAMINE A DETAILED DRAFT DECISION .

2 . IT CANNOT REASONABLY BE DENIED THAT IT IS CONSISTENT WITH ARTICLE 58 ( 2 ) OF THE ECSC TREATY THAT THE COMMISSION SHOULD CHOOSE THE CRITERION OF THE ACTUAL PRODUCTION OF UNDERTAKINGS FOR THE PURPOSE OF DEFINING THE ' ' EQUITABLE BASIS ' ' FOR DETERMINING PRODUCTION QUOTAS UNDER THAT PROVISION . UNLIKE THE CRITERION OF PRODUCTIVE CAPACITY , THE APPRAISAL OF WHICH IS BY ITS NATURE UNCERTAIN , REFERENCE TO UNDERTAKINGS ' ACTUAL PRODUCTION HAS THE DOUBLE ADVANTAGE OF AFFORDING AN OBJECTIVE BASIS OF APPRAISAL AND OF ENABLING TOTAL PRODUCTION TO BE REDUCED WITHOUT , HOWEVER , ALTERING THE VARIOUS POSITIONS OF UNDERTAKINGS ON THE MARKET .

3 . IT IS NOT THE PURPOSE OF ARTICLE 58 OF THE ECSC TREATY TO ENABLE UNDER TAKINGS TO EXEMPT THEMSELVES IN A PERIOD OF CRISIS FROM THE CONSEQUENCES OF THEIR EARLIER DECISIONS REGARDING INVESTMENT AND OUTPUT WHEN SUCH DECISIONS HAVE PROVED TO BE ILL-SUITED TO THE TREND OF THE ECONOMY .

WHILST IT IS TRUE THAT MEASURES ADOPTED UNDER ARTICLE 58 MUST ENABLE THE COMMUNITY ' S STEEL INDUSTRY AS A WHOLE TO DEFEND ITSELF , ON A COLLECTIVE BASIS AND BY A COOPERATIVE EFFORT , AGAINST THE CONSEQUENCES OF CRISES OCCURRING WHEN DEMAND DECLINES , THE ARTICLE IN NO WAY PLACES THE COMMISSION UNDER A DUTY TO GUARANTEE TO ANY GIVEN UNDERTAKING , TO THE DETRIMENT OF OTHERS WITHIN THE COMMUNITY , SUCH MINIMUM PRODUCTION AS THAT UNDERTAKING REGARDS AS APPROPRIATE IN ACCORDANCE WITH ITS OWN CRITERIA OF PROFITABILITY AND DEVELOPMENT .

4 . THE STATEMENT OF REASONS ON WHICH COMMUNITY MEASURES ARE BASED MUST BE APPROPRIATE TO THE NATURE OF THE MEASURE IN QUESTION : IT MUST SHOW CLEARLY AND UNEQUIVOCALLY THE REASONING OF THE COMMUNITY AUTHORITY WHICH ISSUED THE MEASURE , SO AS TO ALLOW THOSE CONCERNED TO TAKE COGNIZANCE OF THE JUSTIFICATION FOR THE MEASURE ADOPTED AND TO ENABLE THE COURT TO EXERCISE ITS POWERS OF REVIEW . IN THE CASE OF A MEASURE IN THE NATURE OF A REGULATION , THE STATEMENT OF REASONS CANNOT BE REQUIRED TO SPECIFY THE OFTEN VERY NUMEROUS AND COMPLEX MATTERS OF LAW OR OF FACT CONSTITUTING THE SUBJECT-MATTER OF SUCH INSTRUMENTS , AS LONG AS THOSE MATTERS FALL WITHIN THE FRAMEWORK OF THE WHOLE OF WHICH THEY FORM PART .

5 . WHILST THE COMMISSION IS ENTITLED , IN LAYING DOWN THE SYSTEM OF PRODUCTION QUOTAS , TO TAKE ACCOUNT OF THE EFFECT OF SUBSIDIES THE ILLEGALITY OF WHICH HAS BEEN ESTABLISHED IN CONFORMITY WITH THE APPROPRIATE PROCEDURES , IT IS NEVERTHELESS IMPOSSIBLE TO EXPECT THE MEASURES REFERRED TO IN ARTICLE 58 , WHICH ARE DESIGNED TO DEAL WITH A CRISIS , TO BE USED TO COUNTERACT THE EFFECT OF ILLEGAL AIDS GRANTED BY MEMBER STATES .

6 . OWING TO THE VERY NATURE OF THE MACHINERY ENVISAGED BY ARTICLE 58 OF THE ECSC TREATY , ANY RESTRICTION OF PRODUCTION HAS AN IMPACT BOTH ON OPPORTUNITIES OF SELLING ON THE COMMUNITY MARKET AND ON EXPORT OPPORTUNITIES . THE LAYING DOWN OF PRODUCTION QUOTAS WOULD BE INEFFECTIVE IF UNDERTAKINGS WERE TO REMAIN AT LIBERTY TO EXPORT QUANTITIES WITHOUT ANY SUPERVISION TO NON-MEMBER COUNTRIES , SINCE THE EFFECT OF SUCH EXPORTS MIGHT BE NOT ONLY TO COMPROMISE THE INTERESTS OF THE COMMUNITY IN THOSE MARKETS BUT ALSO TO DEFLECT SOME OF THE GOODS BACK TO THE DOMESTIC MARKET AND TO JEOPARDIZE ITS EQUILIBRIUM .

7 . IT LIES WITHIN THE DISCRETION OF THE COMMISSION TO TAKE TRADE WITH NON-MEMBER COUNTRIES INTO ACCOUNT IN THE CONTEXT OF THE MEASURES TO BE ADOPTED IN PURSUANCE OF ARTICLE 58 OF THE ECSC TREATY . IN THAT RESPECT IT IS , IN FACT , FOR THE COMMISSION TO TAKE ACCOUNT BOTH OF THE NEEDS OF THE COMMON MARKET ITSELF AND OF THE INTERESTS OF THE COMMUNITY IN ITS RELATIONS WITH NON-MEMBER COUNTRIES . WHILST IT IS TRUE THAT ARTICLE 58 EMPOWERS THE COMMISSION , IN PERIODS OF MANIFEST CRISIS , TO TAKE ACTION WITH REGARD TO PRODUCTION WITHOUT REGARD TO TRADE WITH NON-MEMBER COUNTRIES , THE PROVISIONS CANNOT BE INTERPRETED AS MEANING THAT IT PERMITS NO MORE THAN THE ALLOCATION TO EVERY UNDERTAKING OF A COMPREHENSIVE PRODUCTION QUOTA WHICH MAY BE DISPOSED OF EITHER ON THE DOMESTIC MARKET OR ON THE MARKET OF NON-MEMBER COUNTRIES .

IN CASE 136/82

KLOCKNER-WERKE AG , A STEEL UNDERTAKING HAVING ITS REGISTERED OFFICE IN DUISBURG , REPRESENTED BY PROFESSOR BODO BORNER OF COLOGNE UNIVERSITY , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF ERNEST ARENDT , 34 B RUE PHILIPPE-II ,

APPLICANT ,

V

COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY ITS LEGAL ADVISER , NORBERT KOCH , ACTING AS AGENT , ASSISTED BY PROFESSOR EBERHARD GRABITZ OF THE FREE UNIVERSITY OF BERLIN , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF ORESTE MONTALTO , A MEMBER OF ITS LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG ,

DEFENDANT ,

APPLICATION FOR A DECLARATION THAT THE INDIVIDUAL DECISION ADOPTED BY THE COMMISSION ON 24 MARCH 1982 , FIXING THE PRODUCTION QUOTAS IMPOSED ON THE APPLICANT FOR THE SECOND QUARTER OF 1982 IS VOID WHOLLY OR IN PART ,

1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 28 APRIL 1982 , KLOCKNER-WERKE AG , A STEEL UNDERTAKING HAVING ITS REGISTERED OFFICE IN DUISBURG , FEDERAL REPUBLIC OF GERMANY , INSTITUTED PROCEEDINGS UNDER THE SECOND PARAGRAPH OF ARTICLE 33 OF THE ECSC TREATY , SEEKING A DECLARATION OF THE NULLITY OF THE COMMISSION ' S COMMUNICATION OF 24 MARCH 1982 , IN WHICH THE COMMISSION FIXED , PURSUANT TO GENERAL DECISION 1831/81/ECSC OF 24 JUNE 1981 ESTABLISHING FOR UNDERTAKINGS IN THE IRON AND STEEL INDUSTRY A MONITORING SYSTEM AND A NEW SYSTEM OF PRODUCTION QUOTAS IN RESPECT OF CERTAIN PRODUCTS ( OFFICIAL JOURNAL L 180 , P . 1 ), IN RELATION TO THE APPLICANT UNDERTAKING , REFERENCE PRODUCTION FIGURES AND REFERENCE QUANTITIES , TOGETHER WITH PRODUCTION AND DELIVERY QUOTAS FOR DERIVED PRODUCTS IN CATEGORY I FOR THE SECOND QUARTER OF 1982 .

2 IN SUPPORT OF ITS ACTION THE APPLICANT PUTS FORWARD A SERIES OF SUBMISSIONS WHICH MAY BE SUMMARIZED AS FOLLOWS :

1 . ABSENCE OF PROPER ASSENT BY THE COUNCIL TO DECISION 1831/81 ;

2 . FAILURE BY THE COMMISSION TO OBSERVE ITS DUTY TO GUARANTEE , BY THE FIXING OF PRODUCTION QUOTAS , A MINIMUM UTILIZATION OF PRODUCTIVE CAPACITY , AND LACK IN THAT REGARD OF A STATEMENT OF THE REASONS ON WHICH DECISION 1831/81 WAS BASED ;

3 . FAILURE ON THE PART OF THE COMMISSION TO TAKE ACCOUNT , WHEN FIXING THE PRODUCTION QUOTAS , OF THE EFFECTS OF ILLEGAL SUBSIDIES GRANTED BY CERTAIN MEMBER STATES TO THEIR STEEL UNDERTAKINGS ;

4 . SUBSTITUTION BY THE COMMISSION OF ' ' DELIVERY QUOTAS ' ' WITHIN THE COMMON MARKET FOR THE PRODUCTION QUOTAS ENVISAGED BY ARTICLE 58 , AND FIXING OF QUOTAS ON EXPORTS .

3 IN THE ALTERNATIVE , THE APPLICANT CLAIMS THAT THE COURT SHOULD :

( A ) DECLARE VOID THE PRODUCTION QUOTAS FIXED BY THE CONTESTED DECISION TO THE EXTENT TO WHICH THEY FALL BELOW CERTAIN TONNAGES FOR CATEGORIES I A AND I B ;

( B)DECLARE THE PRODUCTION QUOTAS VOID IN SO FAR AS PRODUCTION IS INTENDED FOR NON-MEMBER COUNTRIES :

( C)DECLARE VOID THE CONTESTED DECISION IN SO FAR AS IT PRESCRIBES A PART OF THE PRODUCTION QUOTAS WHICH MAY BE DELIVERED IN THE COMMON MARKET .

4 IN RELATION TO THE ALTERNATIVE HEADS OF CLAIM IT MAY BE OBSERVED THAT THE CLAIM IN SUBPARAGRAPH ( A ) ABOVE IS COVERED BY THE SECOND SUBMISSION , AND THE CLAIMS IN SUBPARAGRAPHS ( B ) AND ( C ) BY THE FOURTH SUBMISSION SET OUT ABOVE . THOSE CLAIMS WILL THEREFORE BE CONSIDERED JOINTLY WITH THE MAIN CONCLUSIONS TO WHICH THEY RELATE .

5 IT SHOULD ALSO BE NOTED , AT THE OUTSET , THAT THE APPLICANT ' S LINE OF ARGUMENT IN CONNECTION WITH THIS ACTION LARGELY COINCIDES WITH THE SUBMISSIONS MADE IN SUPPORT OF THE ACTION IN CASE 119/81 , BETWEEN THE SAME PARTIES , WHICH GAVE RISE TO THE JUDGMENT OF 7 JULY 1982 (( 1982 ) ECR 2627 ). IN THE CONTEXT OF THIS CASE , HOWEVER , IT IS APPROPRIATE TO BEAR IN MIND THAT , IN THE MEANTIME , DECISION 2794/80 OF 31 OCTOBER 1980 ( OFFICIAL JOURNAL L 291 , P . 1 ), WHICH FORMED THE BASIS OF THE DECISION CONTESTED IN CASE 119/81 , HAS BEEN REPLACED BY THE AFOREMENTIONED DECISION 1831/81 , AND FURTHERMORE THAT THE APPLICANT HAS FORMULATED SOME FRESH ARGUMENTS IN SUPPORT OF ITS ACTION . IT WILL THEREFORE BE APPROPRIATE TO TAKE ACCOUNT SIMULTANEOUSLY OF THE POINTS OF LAW AND FACT ALREADY SETTLED BY THE PREVIOUS JUDGMENT AND THE NEW QUESTIONS RAISED BY THESE PROCEEDINGS .

1 . SUBMISSION ALLEGING THE ABSENCE OF ASSENT FROM THE COUNCIL

6 THE APPLICANT DOES NOT DISPUTE THE FACT THAT THE COUNCIL GAVE ITS ASSENT IN CONNECTION WITH DECISION 1831/81 . THE ACTION RELATES TO THE QUESTION WHETHER THE ASSENT WAS GIVEN IN CIRCUMSTANCES CONSISTENT WITH THE REQUIREMENTS OF ARTICLE 58 OF THE ECSC TREATY .

7 ACCORDING TO THE APPLICANT , THE COMMISSION SHOULD HAVE REFERRED TO THE COUNCIL , NOT SOME MORE OR LESS SPECIFIC PROPOSALS , BUT A FULLY ELABORATED DRAFT TEXT . CONSEQUENTLY , THE COMMISSION IS REQUIRED TO DEMONSTRATE , IF CHALLENGED , THAT THE DECISION WHICH IT HAS TAKEN IS IN KEEPING WITH THE TEXT WHICH IT HAS SUBMITTED TO THE COUNCIL AND WHICH HAS RECEIVED THE LATTER ' S APPROVAL . FAILING SUCH EVIDENCE , THE DECISION CANNOT BE REGARDED AS CONSISTENT WITH THE PROVISIONS OF COMMUNITY LAW AND IS THEREFORE LIKELY TO ENCOUNTER RESISTANCE FROM THE MEMBER STATES . IN ORDER TO REVIEW THE CONSISTENCY OF THE PROCEDURE FOLLOWED WITH THE REQUIREMENTS OF ARTICLE 58 , THE APPLICANT SEEKS PRODUCTION OF THE COUNCIL ' S MINUTES AND OF THE SOUND-RECORDING OF ITS DISCUSSIONS .

8 THAT ATTITUDE ON THE PART OF THE APPLICANT IS FOUNDED ON A FAILURE TO APPRECIATE EITHER THE DISTRIBUTION OF POWERS INTENDED BY ARTICLE 58 OR THE PRINCIPLES UNDERLYING THE LEGISLATIVE SYSTEM SET UP BY THE ECSC TREATY .

9 UNDER THE FIRST SUBPARAGRAPH OF ARTICLE 58 ( 1 ), IT IS FOR THE COMMISSION TO ESTABLISH THE EXISTENCE OF A MANIFEST CRISIS . SHOULD SUCH A CRISIS BECOME APPARENT AND SHOULD THE MEANS OF ACTION PROVIDED FOR IN ARTICLE 57 BE INSUFFICIENT TO DEAL WITH IT , ARTICLE 58 PLACES THE COMMISSION UNDER A DUTY TO ESTABLISH A SYSTEM OF PRODUCTION QUOTAS . THE POWER TO TAKE APPROPRIATE MEASURES LIES , UNDER ARTICLE 58 , WITH THE COMMISSION , SUBJECT TO THE CONDITION THAT IT MAY NOT ACT EXCEPT WITH THE ' ' ASSENT ' ' OF THE COUNCIL .

10 IN LAYING DOWN THAT FORM OF CONSULTATION BETWEEN THE COMMISSION AND THE COUNCIL , ARTICLE 58 DID NOT DETERMINE ITS DETAILED ARRANGEMENTS . IN THOSE CIRCUMSTANCES , IT IS A MATTER FOR THE TWO INSTITUTIONS TO PROVIDE , BY COMMON CONSENT AND IN ACCORDANCE WITH THEIR RESPECTIVE POWERS , FOR THE FORM WHICH THEIR COOPERATION SHALL TAKE . THE REQUIREMENTS OF ARTICLE 58 ARE THUS SATISFIED IF SUCH COOPERATION CULMINATES IN THE COUNCIL ' S ASSSENTING TO THE ' ' QUOTA SYSTEM ' ' WHICH THE COMMISSION PROPOSES TO SET UP , WITHOUT ITS BEING NECESSARY TO REQUIRE THE TWO INSTITUTIONS TO EXAMINE A DETAILED DRAFT DECISION .

11 AS THE COURT HAS ALREADY POINTED OUT IN ITS JUDGMENT OF 7 JULY 1982 , THE DECISION OF THE COMMISSION , THE PREAMBLE TO WHICH RECITES THE COUNCIL ' S ASSENT , MUST BE PRESUMED TO HAVE BEEN LAWFULLY TAKEN . THE APPLICANT HAS LIMITED ITSELF TO PUTTING HYPOTHETICAL QUESTIONS CONCERNING POSSIBLE IRREGULARITIES WHICH MAY OCCUR IN DEALINGS BETWEEN THE COMMISSION AND THE COUNCIL BUT IT HAS FAILED TO ADDUCE THE SLIGHTEST EVIDENCE THAT THE COUNCIL ' S ASSENT WAS OBTAINED OTHERWISE THAN IN CIRCUMSTANCES CONSISTENT WITH THE REQUIREMENTS OF ARTICLE 58 . THERE ARE THEREFORE NO GROUNDS FOR ORDERING AN INQUIRY IN THAT RESPECT .

12 LASTLY , AS FAR AS THE REQUIREMENTS ARISING UNDER COMMUNITY LAW ARE CONCERNED , IT SHOULD BE OBSERVED THAT THE SYSTEM OF LEGAL REMEDIES LAID DOWN BY THE ECSC TREATY AFFORDS APPROPRIATE GUARANTEES IN THIS RESPECT . BOTH THE COUNCIL AND THE MEMBER STATES ARE ENTITLED , BY VIRTUE OF ARTICLE 33 OF THE ECSC TREATY , TO REFER A DECISION OF THE COMMISSION FOR REVIEW BY THE COURT IF THEY CONSIDER THAT THE COUNCIL ' S ASSENT WAS NOT FORTHCOMING IN PROPER CIRCUMSTANCES . IT IS SUFFICIENT TO RECORD THAT , IN THIS CASE , DECISION 1831/81 WAS NOT THE SUBJECT OF SUCH A CHALLENGE WITHIN THE PERIOD PRESCRIBED BY THE TREATY .

13 THE SUBMISSION MUST THEREFORE BE DISMISSED .

2 . SUBMISSION ALLEGING FAILURE TO FULFIL THE DUTY TO GUARANTEE A MINIMUM UTILIZATION OF PRODUCTIVE CAPACITY

14 IN THIS CASE THE APPLICANT HAS , IN SUBSTANCE , REITERATED THE ARGUMENTS WHICH IT HAS ALREADY SET FORTH IN CASE 119/81 . IT ASSERTS THAT THE QUEST BY THE COMMISSION FOR AN ' ' EQUITABLE BASIS ' ' IMPLIES A DUTY TO ENSURE THAT UNDERTAKINGS MAINTAIN A MINIMUM LEVEL OF EMPLOYMENT , BY FIXING THE QUOTAS IN SUCH A WAY THAT EVERY UNDERTAKING IS GUARANTEED A UTILIZATION OF ITS PRODUCTIVE CAPACITY WHICH CORRESPONDS TO THE COMMUNITY AVERAGE . IN THAT CONNECTION , IT CONSIDERS THAT DECISION 1831/81 HAS CAUSED ITS POSITION TO DETERIORATE STILL FURTHER AS COMPARED WITH THE POSITION UNDER DECISION 2794/80 , OWING TO THE FACT THAT THE NEW DECISION NO LONGER ALLOWS FOR THE POSSIBILITY OF INCREASING REFERENCE PRODUCTION IN FAVOUR OF THOSE UNDERTAKINGS WHICH ARE EXPERIENCING A UTILIZATION RATE OF THEIR PLANT WHICH IS BELOW THE COMMUNITY AVERAGE , AS WAS PROVIDED BY ARTICLE 4 ( 3 ) OF THE PREVIOUS DECISION , SINCE THE ADVANTAGE IN QUESTION WAS ONLY HALF MAINTAINED BY THE EFFECT OF ARTICLE 6 ( 1 ) ( B ) OF THE NEW DECISION .

15 THE APPLICANT STATES THAT THE DETERIORATION IN ITS POSITION FOLLOWING THAT REDUCTION IN ITS QUOTAS ENDANGERS ITS VERY EXISTENCE AND PUTS IT IN AN ' ' EMERGENCY SITUATION ' ' . IT TAKES THE VIEW THAT THE OBJECT OF ARTICLE 58 CAN BE ACHIEVED ONLY BY A SYSTEM ORGANIZED IN SUCH A WAY AS TO GUARANTEE TO UNDERTAKINGS AN APPROPRIATE UTILIZATION OF THEIR CURRENT PRODUCTIVE CAPACITY AND NOT BY REFERENCE TO THEIR ACTUAL PRODUCTION DURING PREVIOUS PERIODS .

16 IN CONNECTION WITH THAT SUBMISSION , THE APPLICANT HAS ALSO PURSUED ITS CHALLENGE RELATIVE TO THE COMMISSION ' S ASSESSMENT OF ITS PRODUCTIVE CAPACITY . IT TAKES THE VIEW THAT THE COURT , IN ITS JUDGMENT OF 7 JULY 1982 , DID NOT GIVE A DEFINITIVE RULING ON THE POINT , AND IT THEREFORE RE-ASSERTS THE INFERENCES WHICH IT DRAWS FROM THE SO-CALLED ' ' KAWASAKI REPORT ' ' OF 1 MAY 1981 . IN THESE PROCEEDINGS IT HAS FURTHER REFERRED TO AN EXPERT REPORT DRAWN UP ON 12 JANUARY 1982 BY PROFESSOR JESCHAR WITH THE ASSISTANCE OF THE STEIN-HEURTY ORGANIZATION , CONCERNING THE CAPACITY OF A WALKING-BEAM FURNACE BUILT BY THE LATTER AND FORMING PART OF THE BREMEN ROLLING-MILL . IN THE APPLICANT ' S OPINION , THE CONCLUSION DRAWN BY THAT REPORT JUSTIFIES A MORE FAVOURABLE APPRAISAL OF THE PRODUCTIVE CAPACITY OF THE PLANT IN QUESTION . THE APPLICANT HAS FURTHER SUBMITTED AN ACCOUNTANCY REPORT BY WOLLERT-ELMENDORF KG CONCERNING THE AMOUNT OF THE ADDITIONAL LOSSES TO BE INCURRED BY THE UNDERTAKING SHOULD THE OUTPUT OF ITS ROLLING-MILL BE RESTRICTED .

17 FINALLY , THE APPLICANT ARGUES THAT THE PROVISIONS OF DECISION NO 1831/81 WHICH BROUGHT ABOUT A DETERIORATION IN ITS POSITION AS COMPARED WITH THAT UNDER DECISION 2794/80 LACKS ANY STATEMENT OF THE REASONS ON WHICH IT WAS BASED , AND THAT DECISION 1831/81 IS , FOR THAT REASON , VOID ON THE GROUND OF INFRINGEMENT OF AN ESSENTIAL PROCEDURAL REQUIREMENT .

18 IT APPEARS FROM AN ANALYSIS OF DECISION 1831/81 THAT THE COMMISSION HAS THEREBY AMENDED THE BASIS FOR THE DETERMINATION OF REFERENCE PRODUCTION FIGURES AS PREVIOUSLY FIXED BY DECISION 2794/80 .

19 IN THE FIRST PLACE , ARTICLE 6 ( 1 ) ( A ) OF THE NEW DECISION DIVERSIFIED THE PERIODS TAKEN INTO CONSIDERATION FOR THE ASSESSMENT OF THE REFERENCE PRODUCTION FIGURE . THAT PROVISION MAINTAINS THE PRINCIPLE OF THE TAKING INTO ACCOUNT OF THE MOST FAVOURABLE MONTH OF PRODUCTION OF UNDERTAKINGS DURING THE PERIOD FROM 1977 TO 1980 , BUT IT INTRODUCES TWO NEW REFERENCE PERIODS , NAMELY THE YEAR 1974 AND THE PERIOD IMMEDIATELY PRECEDING THE ENTRY INTO FORCE OF DECISION 2794/80 . IN THE SECOND PLACE , THE NEW DECISION OMITTED THE POSSIBILITY OF ADAPTING REFERENCE PRODUCTION FIGURES IN FAVOUR OF UNDERTAKINGS WHOSE UTILIZATION RATE LAY BELOW THE AVERAGE FOR COMMUNITY UNDERTAKINGS . HOWEVER , THE ADVANTAGES GRANTED TO THE UNDERTAKINGS INVOLVED UNDER THE SYSTEM LAID DOWN BY DECISION 2794/80 , BY VIRTUE OF ARTICLE 4 ( 3 ) THEREOF , WERE RETAINED , AS TO ONE HALF , BY THE EFFECT OF ARTICLE 6 ( 1 ) ( B ) OF DECISION 1831/81 .

20 THE EXPLANATIONS SUPPLIED IN THE COURSE OF PROCEEDINGS DISCLOSE THAT , BY AMENDING THE SYSTEM IN THAT WAY , THE COMMISSION INTENDED TO DEFINE THE BASIS OF CALCULATION USED FOR DETERMINING REFERENCE PRODUCTION FIGURES IN A MORE EQUITABLE MANNER FOR ALL THE UNDERTAKINGS IN THE COMMUNITY , BY DINT OF TAKING INTO CONSIDERATION THEREAFTER , BOTH A PRODUCTION PERIOD PRIOR TO THE CRISIS AND A PERIOD CLOSE TO THE INTRODUCTION OF THE SYSTEM OF PRODUCTION QUOTAS . THE COMMISSION CONSIDERS THAT AS A RESULT OF A BETTER ADJUSTMENT OF THE CRITERIA UNDERLYING THE DETERMINATION OF QUOTAS TO THE ACTUAL SITUATION OF UNDERTAKINGS , THERE WAS NO FURTHER PURPOSE IN RESORTING TO PRODUCTIVE CAPACITY AS A CORRECTIVE OF THE REFERENCE PRODUCTION FIGURES UNDER THE SYSTEM LAID DOWN BY THE EARLIER DECISION . WHILE RETAINING , FOR THOSE UNDERTAKINGS WHICH BENEFITED FROM THE CORRECTIVE , PART OF THE ADVANTAGE THEREBY OBTAINED , THE COMMISSION ATTENUATED ITS EFFECTS BY VIRTUE OF THE ARITHMETICAL MEAN OF THE TWO FACTORS TAKEN INTO CONSIDERATION BY ARTICLE 6 ( 1 ) OF DECISION 1831/81 .

21 IN THAT CONTEXT THE COMMISSION EXPLAINS THAT , IN THE LIGHT OF EXPERIENCE , IT APPEARED THAT THE EFFECT OF THE CORRECTIVE UNDER ARTICLE 4 ( 3 ) OF DECISION 2794/80 WAS TO CONFER AN UNJUSTIFIED ADVANTAGE ON UNDERTAKINGS CHARACTERIZED BY AN OPERATING RATE BELOW THE COMMUNITY AVERAGE , TO THE DETRIMENT OF THE OTHER UNDERTAKINGS . IT NOTES THAT THE APPLICANT DERIVED GREATER BENEFIT FROM THAT PROVISION THAN ANY OTHER UNDERTAKING . THE OBJECTIVE OF THE NEW DECISION WAS PRECISELY TO LESSEN THAT ADVANTAGE IN ORDER TO DO JUSTICE TO PROTESTS FROM OTHER LESS-FAVOURED UNDERTAKINGS . THE COMMISSION DENIES THAT THE TREATMENT OF THE APPLICANT UNDER THE NEW DECISION MAY BE DESCRIBED AS CAUSING ITS PREVIOUS POSITION TO ' ' DETERIORATE ' ' ; THE NEW DECISION MEANS MERELY PARTIAL WITHDRAWAL OF AN UNJUSTIFIED ADVANTAGE .

22 THE COMMISSION CONSIDERS THAT , BY RE-DEFINING THE DETAILED RULES GOVERNING THE CALCULATION OF PRODUCTION QUOTAS , IT HAS MOVED CLOSER TO ESTABLISHING AN ' ' EQUITABLE BASIS ' ' FOR ALL COMMUNITY UNDERTAKINGS . IN THAT CONNECTION IT EMPHASIZES , WHILST RECALLING THE REASONING SET OUT IN CASE 119/81 , THAT A SYSTEM OF PRODUCTION QUOTAS SET UP BY VIRTUE OF ARTICLE 58 MUST NECESSARILY BE BASED ON UNDERTAKINGS ' ACTUAL PRODUCTION AND NOT ON THEIR PRODUCTIVE CAPACITY . AN EXAMINATION OF CAPACITY AFFORDS NO INDICATION AS TO ACTUAL OUTPUT AND IS THEREFORE NOT CAPABLE OF FURNISHING A USEFUL CRITERION FOR THE PURPOSE OF ADAPTING THAT OUTPUT TO THE DECLINE IN DEMAND .

23 AS THE COURT HAS OBSERVED IN ITS JUDGMENT OF 7 JULY 1982 , IT CANNOT REASONABLY BE DENIED THAT THE COMMISSION ' S CHOICE OF THE CRITERION OF ACTUAL PRODUCTION ACCORDS WITH ARTICLE 58 ( 2 ) OF THE TREATY , WHICH REQUIRES THAT QUOTAS SHALL BE DETERMINED ON AN ' ' EQUITABLE BASIS ' ' . THE JUDGMENT STRESSED THAT , UNLIKE THE CRITERION OF PRODUCTIVE CAPACITY , THE APPRAISAL OF WHICH IS BY ITS NATURE UNCERTAIN , REFERENCE TO UNDERTAKINGS ' ACTUAL PRODUCTION HAS THE DOUBLE ADVANTAGE OF AFFORDING AN OBJECTIVE BASIS OF APPRAISAL AND OF ENABLING TOTAL PRODUCTION TO BE REDUCED WITHOUT , HOWEVER , ALTERING THE VARIOUS POSITIONS OF UNDERTAKINGS ON THE MARKET .

24 BY REDUCING THE ADVANTAGE ACCRUING TO CERTAIN UNDERTAKINGS , TO THE DETRIMENT OF OTHERS , FROM TAKING INTO CONSIDERATION AN OPERATING RATE BELOW THE COMMUNITY AVERAGE , AND IN ENDEAVOURING THEREBY TO DISTRIBUTE MORE APPROPRIATELY THE BURDENS ARISING FROM THE CRISIS AMONGST THE UNDERTAKINGS OF THE COMMUNITY AS A WHOLE , THE COMMISSION HAS NOT EXCEEDED THE LIMITS OF THE DISCRETION CONFERRED ON IT BY ARTICLE 58 WHEN IT PROVIDES THAT PRODUCTION QUOTAS MUST BE DETERMINED ' ' ON AN EQUITABLE BASIS ' ' .

25 IT FOLLOWS FROM THE FOREGOING THAT THE APPLICANT , IN DEMANDING THAT THE SYSTEM OF PRODUCTION QUOTAS BE ORGANIZED IN SUCH A WAY THAT UNDERTAKINGS MAY FIND IN IT A GUARANTEE OF A PROPER UTILIZATION OF THEIR PRODUCTIVE CAPACITY , FAILS TO APPRECIATE THE TRUE PURPOSE OF ARTICLE 58 OF THE TREATY , WHICH IS NOT IN FACT DESIGNED TO ENABLE UNDERTAKINGS TO EXEMPT THEMSELVES IN A PERIOD OF CRISIS FROM THE CONSEQUENCES OF THEIR EARLIER DECISIONS REGARDING INVESTMENT AND OUTPUT WHEN SUCH DECISIONS HAVE PROVED TO BE ILL-SUITED TO THE TREND OF THE ECONOMY .

26 WHILST IT IS TRUE THAT MEASURES ADOPTED UNDER ARTICLE 58 MUST ENABLE THE COMMUNITY ' S STEEL INDUSTRY AS A WHOLE TO DEFEND ITSELF , ON A COLLECTIVE BASIS AND BY A COOPERATIVE EFFORT , AGAINST THE CONSEQUENCES OF CRISES OCCURRING WHEN DEMAND DECLINES , THE ARTICLE IN NO WAY PLACES THE COMMISSION UNDER A DUTY TO GUARANTEE TO ANY GIVEN UNDERTAKING , TO THE DETRIMENT OF OTHERS WITHIN THE COMMUNITY , SUCH MINIMUM PRODUCTION AS THAT UNDERTAKING REGARDS AS APPROPRIATE IN ACCORDANCE WITH ITS OWN CRITERIA OF PROFITABILITY AND DEVELOPMENT , AS THE COURT HAS ALREADY EXPLAINED IN ITS JUDGMENT OF 7 JULY 1982 .

27 AS TO THE COMPLAINT MADE BY THE APPLICANT CONCERNING THE DETERMINATION BY THE COMMISSION OF THE PRODUCTIVE CAPACITY OF ITS BUSINESS IN THE CONTEXT OF ARTICLE 4 ( 3 ) OF DECISION 2794/80 , REFERENCE SHOULD BE MADE TO THE REASONING OF THE JUDGMENT OF 7 JULY 1982 WHICH , FOLLOWING A DETAILED ANALYSIS OF THE HISTORY OF THAT ISSUE IN THE PROCEEDINGS , UNEQUIVOCALLY DISALLOWED THAT COMPLAINT . IT IS SUFFICIENT TO RECALL THAT THE APPLICANT HAD FOR YEARS BEEN SUPPLYING INCORRECT INFORMATION ON THE PRODUCTIVE CAPACITY OF ITS PLANTS AND THAT IT WAS AS A RESULT OF A REVIEW CARRIED OUT ON THE UNDERTAKING ' S PREMISES THAT THE COMMISSION AGREED TO ACCEPT A REVISED STATEMENT FROM THE APPLICANT , ON WHICH SUBSEQUENT DECISIONS ON THE DETERMINATION OF PRODUCTION QUOTAS HAVE THENCEFORTH BEEN BASED .

28 IN THESE PROCEEDINGS , THE APPLICANT HAS FAILED TO SUPPLY ANY FRESH EVIDENCE ENABLING THAT APPRAISAL TO BE RECONSIDERED . BY THE PRODUCTION OF THE JESCHAR EXPERT REPORT , BASED ON A MATHEMATICAL SIMULATION , THE APPLICANT IS ENDEAVOURING TO RECTIFY ONE ASPECT OF THE REPORT MADE BY THE CENTRE DE RECHERCHES METALLURGIQUES AND THE KAWASAKI STEEL CORPORATION , WHICH THE COURT HAS , IN ANY EVENT , HELD TO BE DEVOID OF PROBATIVE VALUE . AS TO THE WOLLERT-ELMENDORF OPINION , IT IS AN ACCOUNTANCY REPORT WHOSE OBJECT IS TO EVALUATE THE FINANCIAL CONSEQUENCES OF FIXING THE PRODUCTION QUOTAS ALLOCATED TO THE UNDERTAKING FOR THE THIRD QUARTER OF 1981 AS OPPOSED TO A HYPOTHETICAL CASE ADVANCED BY THE APPLICANT CONSISTING OF ALLOCATING QUOTAS BASED ON A HYPOTHETICAL OUTPUT CORRESPONDING TO THE AVERAGE UTILIZATION OF CAPACITY BY COMMUNITY UNDERTAKINGS . THAT ACCOUNTANCY REPORT , WHOSE OBJECT IS TO EVALUATE WHAT IS FINANCIALLY AT STAKE IN THE LITIGATION BETWEEN THE APPLICANT AND THE COMMISSION , IS BASED ON AN ASSESSMENT OF PRODUCTIVE CAPACITY ( 459 000 TONNES PER MONTH = 5 508 000 TONNES PER ANNUM ) WHICH THE COURT HAS ALREADY EXPRESSLY REJECTED IN ITS JUDGMENT OF 7 JULY 1982 . THE REPORT THEREFORE CONTRIBUTES NO FRESH EVIDENCE IN RELATION TO THE QUESTION RAISED BY THE APPLICANT ON THE SUBJECT OF ITS PRODUCTIVE CAPACITY .

29 THAT ISSUE MUST THEREFORE BE REGARDED AS HAVING BEEN DEFINITIVELY SETTLED BY THE JUDGMENT OF 7 JULY 1982 .

30 LASTLY , AS FAR AS CONCERNS THE OBJECTION ALLEGING A DEFECTIVE STATEMENT OF THE REASONS ON WHICH DECISION 1831/81 IS BASED , THE APPLICANT TAKES THE VIEW THAT THE REASONS OF THE COMMISSION DID NOT FIND APPROPRIATE EXPRESSION IN THE PREAMBLE TO THE DECISION , WHICH RESTRICTS ITSELF , ON THE DISPUTED POINT , TO AFFIRMING THAT THE COMMISSION HAS TAKEN ACCOUNT ' ' OF THE EXPERIENCE GAINED IN MANAGING THE STYSTEM SET UP BY ' ' DECISION 2794/80 . ACCORDING TO THE APPLICANT , THE NEW DECISION IS THEREFORE VOID FOR INFRINGEMENT OF AN ESSENTIAL PROCEDURAL REQUIREMENT .

31 IT SHOULD BE OBSERVED IN THIS CONNECTION , FIRST , THAT THE COMMISSION DID IN FACT SHOW , IN THE PRAGRAPH OF THE PREAMBLE QUOTED , THE REASONS FOR WHAT APPEARS TO BE THE ESSENTIAL COMPONENT OF THE NEW DECISION , NAMELY THE ADJUSTMENT OF THE REFERENCE PERIODS TO ACCORD WITH A MORE SUITABLE DEFINITION OF THE BASIS FOR CALCULATING THE QUOTAS , BY TAKING INTO CONSIDERATION PERIODS OF PRODUCTION MORE REPRESENTATIVE THAN THOSE PREVIOUSLY ADOPTED . THAT REASONING IS SUCH AS TO GIVE THE UNDERTAKINGS CONCERNED SUFFICIENTLY PRECISE INFORMATION REGARDING THE OBJECTIVE PURSUED BY THE COMMISSION . THUS THE APPLICANT ' S CRITICISM REALLY RELATES ONLY TO THE COMMISSION ' S FAILURE TO STATE ITS REASONS FOR THE PARTIAL ABANDONMENT OF A CORRECTIVE FACTOR - NAMELY THE REFERENCE TO PRODUCTIVE CAPACITY - CONTAINED IN DECISION 2794/80 .

32 ACCORDING TO THE CASE-LAW OF THE COURT ( SEE , MOST RECENTLY , THE JUDGMENT OF 28 OCTOBER 1982 , LION AND LOIRET & HAENTJENS AND OTHERS V FIRS , JOINED CASES 292 AND 293/81 , ( 1982 ) ECR 3887 ), THE STATEMENT OF THE REASONS ON WHICH COMMUNITY MEASURES ARE BASED MUST BE APPROPRIATE TO THE NATURE OF THE MEASURE IN QUESTION : IT MUST SHOW CLEARLY AND UNEQUIVOCALLY THE REASONING OF THE COMMUNITY AUTHORITY WHICH ISSUED THE MEASURE , SO AS TO ALLOW THOSE CONCERNED TO TAKE COGNIZANCE OF THE JUSTIFICATION FOR THE MEASURE ADOPTED AND TO ENABLE THE COURT TO EXERCISE ITS POWER OF REVIEW . IN THE CASE OF A MEASURE IN THE NATURE OF A REGULATION , SUCH AS THE GENERAL DECISION IN DISPUTE , THE STATEMENT OF REASONS CANNOT BE REQUIRED TO SPECIFY THE OFTEN VERY NUMEROUS AND COMPLEX MATTERS OF LAW OR OF FACT CONSTITUTING THE SUBJECT-MATTER OF SUCH INSTRUMENTS , AS LONG AS THOSE MATTERS FALL WITHIN THE FRAMEWORK OF THE WHOLE OF WHICH THEY FORM PART .

33 SUCH IS UNDENIABLY THE CASE WITH THE PROVISIONS AT ISSUE , THE SCOPE OF WHICH MIGHT HAVE BEEN ASCERTAINED WITHOUT DIFFICULTY BY THE APPLICANT BY A COMPARISON OF THE PROVISIONS OF THE TWO SUCCESSIVE DECISIONS . IT WOULD THEREFORE BE WRONG TO GO SO FAR AS TO DEMAND THAT THE COMMISSION SHOULD DEVOTE A SPECIFIC EXPLANATION TO A DETAIL OF THE ARRANGEMENTS , WHICH MAY BE REGARDED AS THE ATTENUATED TRANSFER TO A NEW DECISION OF A CORRECTIVE FACTOR , THE BASIS AND JUSTIFICATION FOR WHICH MAY BE FOUND IN DECISION 2794/80 .

34 IT FOLLOWS FROM THE FOREGOING THAT THE SUBMISSION MUST BE DISMISSED .

3 . SUBMISSION ALLEGING THE FAILURE BY THE COMMISSION TO TAKE ACCOUNT OF THE EFFECTS OF UNLAWFUL SUBSIDIES

35 IN SUPPORT OF THIS SUBMISSION THE APPLICANT HAS REPEATED WITHOUT MODIFICATION THE ARGUMENTS WHICH IT PUT FORWARD IN ITS ACTION IN CASE 119/81 .

36 IT WILL BE RECALLED THAT THE COURT , IN ITS JUDGMENT OF 7 JULY 1982 , ACKNOWLEDGED THAT THE CRITICISMS PUT FORWARD BY THE APPLICANT AGAINST THE FAILURE OF THE COMMISSION TO TAKE ACTION IN CONNECTION WITH PUBLIC SUBSIDIES WHICH , IN SOME MEMBER STATES , HAVE DISTORTED THE CONDITIONS OF PRODUCTION AND COMPETITION IN THE STEEL MARKET WERE WELL FOUNDED . HOWEVER , IT SHOULD FURTHER BE RECALLED THAT , IN THE SAME JUDGMENT , THE COURT IN THE FIRST PLACE ACKNOWLEDGED THAT THE COMMISSION WAS ENTITLED , IN LAYING DOWN THE SYSTEM OF PRODUCTION QUOTAS , TO TAKE ACCOUNT OF THE EFFECT OF SUBSIDIES THE ILLEGALITY OF WHICH HAS BEEN ESTABLISHED IN CONFORMITY WITH THE APPROPRIATE PROCEDURES ; BUT THAT , IN THE SECOND PLACE , THE COURT HELD THAT IT WAS NEVERTHELESS IMPOSSIBLE TO EXPECT THE MEASURES REFERRED TO IN ARTICLE 58 , WHICH ARE DESIGNED TO DEAL WITH A CRISIS , TO BE USED TO COUNTERACT THE EFFECT OF ILLEGAL AIDS GRANTED BY MEMBER STATES .

37 SINCE NO FRESH ARGUMENT HAS BEEN ADDUCED IN THIS RESPECT , IT MUST BE CONCLUDED THAT THIS SUBMISSION ALSO MUST BE DISMISSED .

4 . SUBMISSION ALLEGING THE SUBSTITUTION BY THE COMMISSION OF ' ' DELIVERY QUOTAS ' ' IN THE COMMON MARKET FOR PRODUCTION QUOTAS , AND THE SETTING OF EXPORT QUOTAS

38 THE APPLICANT TAKES THE VIEW THAT THE QUESTION OF ' ' DELIVERY QUOTAS ' ' WHICH WAS PREVIOUSLY THE SUBJECT OF THE ACTION IN CASE 119/81 , WAS NOT RESOLVED BY THE JUDGMENT OF 7 JULY 1982 INASMUCH AS THE COURT HELD THEREIN THAT NO SUCH CONCEPT PLAYED ANY PART IN THE DETERMINATION OF THE PRODUCTION QUOTAS FOR THE SECOND QUARTER OF 1981 . IT THEREFORE REQUESTS THAT THAT COMPLEX OF QUESTIONS BE RECONSIDERED AND IT ARGUES , IN SUBSTANCE , THAT ARTICLE 58 EMPOWERED THE COMMISSION TO TAKE ACTION WITH REGARD ONLY TO THE PRODUCTION OF STEEL AND NOT TO ITS MARKETING , WHETHER IN THE COMMON MARKET OR ON EXPORT MARKETS . THE ESCS TREATY AS A WHOLE DOES NOT SUPPORT THE INFERENCE OF ' ' IMPLIED POWERS ' ' ENABLING THE COMMISSION TO TAKE ACTION WITH REGARD TO THE DELIVERY OF GOODS .

39 AS TO THE DISTRIBUTION OF DELIVERIES BETWEEN THE DOMESTIC MARKET AND NON-MEMBER COUNTRIES , THE APPLICANT TAKES THE VIEW THAT ARTICLE 58 DOES NOT EMPOWER THE COMMISSION TO REGULATE EXTERNAL TRADE OR , IN PARTICULAR , TO CURTAIL EXPORTS . ITS VIEW IS THAT , UNDER THE SCHEME OF THE ECSC TREATY , COMMERCIAL POLICY FALLS WITHIN THE COMPETENCE OF MEMBER STATES . THE APPLICANT EXPLAINS THAT THE COMMISSION WAS EMPOWERED TO FIX PRODUCTION QUOTAS ONLY AT THE LEVEL OF DOMESTIC DEMAND , AND TO PERMIT UNDERTAKINGS TO DEDUCT FROM THE OUTPUT TO TO BE TAKEN INTO ACCOUNT , FOR THE CALCULATION OF PRODUCTION QUOTAS , THOSE QUANTITIES PROVEN TO HAVE BEEN EXPORTED TO NON-MEMBER COUNTRIES .

40 AS THE QUESTIONS RAISED ARE THE SUBJECT , IN DECISION 1831/81 , OF MORE EXPLICIT RULES THAN THOSE IN THE PREVIOUS DECISION , IT IS APPROPRIATE TO CONSIDER ONCE MORE THE APPLICANT ' S ARGUMENTS IN THE LIGHT OF THE NEW PROVISIONS .

41 UNDER ARTICLE 5 OF DECISION 1831/81 , THE COMMISSION IS TO FIX EACH QUARTER FOR EACH UNDERTAKING ITS PRODUCTION QUOTA AND THE PART OF SUCH QUOTAS WHICH MAY BE DELIVERED IN THE COMMON MARKET . THE DETAILED RULES FOR THAT DISTRIBUTION ARE DEALT WITH IN ARTICLES 8 TO 11 ; UNDER ARTICLE 11 ( 5 ), DELIVERIES IN RESPECT OF WHICH AN UNDERTAKING DOES NOT SHOW PROOF OF EXPORT OUTSIDE THE TERRITORY OF THE COMMUNITY ARE TO BE DEEMED TO HAVE BEEN MADE WITHIN THE COMMON MARKET .

42 IT FOLLOWS FROM THOSE PROVISIONS AS A WHOLE THAT THE COMMISSION IS TO FIX FOR EACH UNDERTAKING A COMPREHENSIVE PRODUCTION QUOTA WITHIN WHICH IT SPECIFIES THAT PART WHICH MAY BE DISPOSED OF WITHIN THE COMMON MARKET , THE BALANCE OF WHICH MAY BE DELIVERED WITHIN THE MARKETS OF NON-MEMBER COUNTRIES . ARTICLE 9 OF THE DECISION PROVIDES FOR SEPARATE ABATEMENT RATES FOR ESTABLISHING THE PRODUCTION QUOTAS AND THE PART THEREOF WHICH MAY BE DELIVERED WITHIN THE COMMON MARKET . THE PREVAILING ABATEMENT RATES FOR THE SECOND QUARTER OF 1982 WERE FIXED , PURSUANT TO THAT PROVISION , BY DECISION 532/82 OF 3 MARCH 1982 ( OFFICIAL JOURNAL L 65 , P . 5 ).

43 IN ITS JUDGMENT OF 7 JULY 1982 , THE COURT STRESSED THAT , OWING TO THE VERY NATURE OF THE MACHINERY ENVISAGED BY ARTICLE 58 OF THE TREATY , ANY RESTRICTION OF PRODUCTION HAS AN IMPACT BOTH ON OPPORTUNITIES OF SELLING ON THE COMMUNITY MARKET AND ON EXPORT OPPORTUNITIES . AS THE COMMISSION HAS RIGHTLY EXPLAINED , THE LAYING DOWN OF PRODUCTION QUOTAS WOULD BE INEFFECTIVE IF UNDERTAKINGS WERE TO REMAIN AT LIBERTY TO EXPORT QUANTITIES WITHOUT ANY SUPERVISION TO NON-MEMBER COUNTRIES , SINCE THE EFFECT OF SUCH EXPORTS MIGHT BE NOT ONLY TO COMPROMISE THE INTERESTS OF THE COMMUNITY IN THOSE MARKETS BUT ALSO TO DEFLECT SOME OF THE GOODS BACK TO THE DOMESTIC MARKET AND TO JEOPARDIZE ITS EQUILIBRIUM .

44 THE JUDGMENT OF 7 JULY 1982 ALSO EMPHASIZED THAT IT LIES WITHIN THE DISCRETION OF THE COMMISSION TO TAKE TRADE WITH NON-MEMBER COUNTRIES INTO ACCOUNT IN THE CONTEXT OF THE MEASURES TO BE ADOPTED IN PURSUANCE OF ARTICLE 58 . IN THAT RESPECT IT IS , IN FACT , FOR THE COMMISSION TO TAKE ACCOUNT BOTH OF THE NEEDS OF THE COMMON MARKET ITSELF AND OF THE INTERESTS OF THE COMMUNITY IN ITS RELATIONS WITH NON-MEMBER COUNTRIES . WHILST IT IS TRUE THAT ARTICLE 58 EMPOWERS THE COMMISSION , IN PERIODS OF MANIFEST CRISIS , TO TAKE ACTION WITH REGARD TO PRODUCTION WITHOUT REGARD TO TRADE WITH NON-MEMBER COUNTRIES , THE PROVISION CANNOT BE INTERPRETED AS MEANING THAT IT PERMITS NO MORE THAN THE ALLOCATION TO EVERY UNDERTAKING OF A COMPREHENSIVE PRODUCTION QUOTA WHICH MAY BE DISPOSED OF EITHER ON THE DOMESTIC MARKET OR ON THE MARKET OF NON-MEMBER COUNTRIES .

45 IT FOLLOWS THAT THE COMMISSION DID NOT EXCEED THE POWERS WHICH IT DERIVES FROM ARTICLE 58 WHEN , IN THE CONTESTED DECISION , IT FIXED SEPARATE QUARTERLY REFERENCE PRODUCTION FIGURES AND REFERENCE QUANTITIES FOR THE APPLICATION OF THE ABATEMENT RATES GOVERNING THE DETERMINATION OF THE PRODUCTION QUOTA AND OF THAT PART OF PRODUCTION WHICH MIGHT BE DELIVERED ON THE COMMON MARKET .

46 THAT SUBMISSION MUST THEREFORE ALSO BE DISMISSED .

COSTS

47 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . AS THE APPLICANT HAS FAILED IN ITS SUBMISSIONS IT MUST BE ORDERED TO PAY THE COSTS .

ON THOSE GROUNDS ,

THE COURT ( FOURTH CHAMBER )

HEREBY :

1 . DISMISSES THE APPLICATION ;

2 . ORDERS THE APPLICANT TO PAY THE COSTS .