1.

Principally, the applicant takes the view that it is possible to speak in terms of exceptional difficulties within the meaning of Article 14 of Decision 2794/80 not only when the rate of utilization of an undertaking is more than 10% below the Community average. That constitutes an inadmissible constriction of the test applied, which may lead to discrimination. What is called for is rather an appraisal of all the circumstances of each individual case, including economic factors and in particular the financial situation; that may readily disclose that relevant difficulties of an exceptional character exist even when the rate of utilization deviates by less than 10% below the average.

In reply, the Commission seeks to justify its administrative practice by pointing out in general terms that Article 14 represents a derogative provision which requires to be narrowly construed. In doing so, the Commission resorted not merely to one criterion, namely the one mentioned above. Article 14 has been applied primarily in cases in which delivery obligations could not otherwise have been met, such obligations being viewed within narrow limits, however, in accordance with the stated principle, that is to say, in so far as the existence of orders from abroad could be demonstrated. It was a matter of comparing utilization levels as well, inasmuch as Article 14 has been invoked whenever reference production has — owing to technical difficulties or to strikes, for example — deviated sharply from the average, a normal increase under Article 4 (3) to (5) being ruled out. In that respect, however, the Commission deemed a fixed margin to be necessary, first in order to avoid instances of discrimination and secondly so as to simplify administrative procedure, since the quotas, which have to be fixed at quarterly intervals, needed to be adapted as swiftly as possible. Moreover, the margin chosen seems a proper one. Since Article 14 speaks of exceptional difficulties, a fairly wide deviation from the average is certainly called for. Another important point is that not only is the margin selected by the Commission employed in Article 4 (3) of Decision 2794/80, but also that fluctuations of that nature are, according to experience in the steel market, quite common in normal market conditions. Not least, the Commission contends that consideration had to be given to the facts that there is some uncertainty in assessing productive capacity and that the danger of discriminating against undertakings increases if a lesser deviation from average utilization is taken into account. Moreover, in connection with the need to give a narrow interpretation to Article 14, the Commission points out that, according tc its wording, any difficulties must be tke consequence of enforcing the production-quota system. Seen in that light, it is impossible to envisage all the possibilities, such as the debt-servicing commitments cited by the applicant, which resulted from decisions made by the undertaking prior to the introduction oi: the quota system, or economic circumstances such as the situation with regard to revenue, which itself was a premise for the introduction of the quota system, not a consequence thereof.

As regards the first point of this argument, it is certainly true that the application of the hardship clause in Article 14 must be subject to stringent conditions. In the interests of equality of treatment too it is possible to sympathize to some extent with the view that a fixed margin of deviation from the average rate of utilization was regarded as an important criterion in that connection. However, it seems to me to be equally true to say that an inflexible adherence to precisely 10% as the sole yardstick — besides proven delivery commitments — is bound to encounter serious misgivings. In answer to the Commission's statement that such is the usual margin of fluctuation under normal market conditions, it may rightly be said that under the quota system the production level has been depressed far below normal market conditions and that in such circumstances any further reduction of utilization, even if less than 10%, may give rise to exceptional difficulties. Similarly unconvincing is the Commission's reference to the difficulties in establishing capacity correctly; for if such difficulties exist — which is beyond doubt — it is quite conceivable that too low a capacity will be adopted, so that, when measured against the proper capacity, a wider deviation from the average degree of utilization results which may indeed constitute an exceptional difficulty within the meaning of Article 14.

Therefore, if in principle it may be acknowledged as sound to have chosen a 10% deviation from average utilization as a guideline, the Commission, in adhering rigidly to that criterion, undoubtedly did not do justice to the purpose of Article 14, which is to ensure, in a relatively crude system, that production quotas are determined as fairly as possible in each individual case. It must thus be assumed that the Commission, acting of course on proper, substantiated representations, was obliged to examine whether even a lesser deviation from the average rate of utilization did not give rise to exceptional difficulties of the kind envisaged which were not solely the responsibility of the undertaking in question. Although this is not the place for formulating a comprehensive theory, it is possible to think of relevant factors such as my colleague, Mr Advocate General VerLoren van Themaat, has suggested in his Opinion on Case 119/81 ( 2 ) in connection with the problem surrounding subsidies, namely that even where Article 14 is applied, the problem of subsidizing undertakings and the resultant difficulties for. other, unsubsidized undertakings might play a role.

Since in the present case the only crucial factor in the Commission's negative decision was — as the Court has heard — the observation that the applicant's rate of utilization deviated from the average by less than 10% — and I shall examine shortly whether that was the fact — and since in any case no submission was made to the effect that the applicant failed, when applying under Article 14, to adduce cogent reasons of any other nature indicating the presence of exceptional difficulties, the contested decision may justifiably be declared void on the grounds that the Commission inadmissibly restricted the examination required of it by Article 14 of Decision 2794/80.

2.

The applicant further maintains that the Commission was wrong to deny that the criterion which it regarded as decisive, namely a deviation of more than 10% in the rate of utilization from the Community average, was satisfied in the applicant's case. The Commission reached that conclusion, it claims, by assuming too low a capacity for the Bremen No II hot-rolled wide-strip mill. If the Commission had conceded that the output capacity was, not 355000 tonnes per month, but (as stated in the pleadings) 459000 tonnes per months, the applicant's utilization of capacity following the quotas as notified would have been disclosed as being no more than 39%, and hence it would indeed have been more than 10% below the Community average (56% during the first quarter of 1981). Furthermore, the applicant complains in that regard — in its pleadings, at any rate — that the Commission wrongly failed to take into consideration the capacity of the Bremen No I hot-rolled wide-strip mill. This mill was commissioned in 1958 and was temporarily closed down in April 1974 as part of the restructuring plan.

3.

In Case 303/81 it may thus be stated that the application formulated therein appears to be well founded, first because the Commission based its decision as to Article 14 on the applicant's rate of utilization alone, and secondly because, in spite of cogent evidence, it failed to verify the applicant's capacity, which very probably would have disclosed that its utilization rate was, owing to the quotas notified to it in the first quarter of 1981, more than 10% below the average utilization within the Community.

1.

If my views on Application 303/81 are accepted, and if therefore it is insisted that the decision whereby the Commission refused to apply Article 14 of Decision 2794/80 to the applicant be declared void, it is clear that the Commission's fine cannot be maintained either. For the Commission will then be required to reexamine the application of Article 14 in the first quarter of 1981 and may come to the conclusion that the applicant's production quota should have been larger. That may indicate a lower margin of excess over the quota and consequently a lower fine, or even — if it seems appropriate to raise the quota to a level which corresponds to the applicant's actual output — a total cancellation of the fine, Article 9 not having been infringed.

2.

The matter does not, of course, stop at that observation. Instead, I shall examine in the alternative the separate arguments submitted in connection with Case 312/81.

Those arguments are now founded exclusively on an alleged promise on the part of the Member of the Commission responsible for the steel quota provisions, transmitted by his Chef de Cabinet, to arrange for a solution of the applicant's problem arising from its having exceeded the production quota in the first quarter of 1981. Although the written pleadings have gone further and have argued the illegality of the general Decision 2794/80, there is no further need to examine either the claim itself or the complex problems regarding admissibility which āre partly connected with it, aš the applicant expressly stated during the oral procedure that, after considering the judgment in Case 119/81 (cited previously), it no longer maintained the objection asserting the illegality of Decision 2794/80.

3.

As regards the promise given to the applicant, which is supposed to result in the illegality of the decision to impose a fine, the following particulars were supplied:

The applicant had been invited to participate in talks on 20 March 1981, designed to prepare legislation for the period following 30 June 1981, as part of which the larger steel undertakings were supposed to arrange voluntary restrictions on output. The applicant had in fact not intended to cooperate, because it feared that it would not receive an equitable share of the production allowance to be agreed. The Commission, which had previously announced that under Article 58 of the ECSC Treaty the quota provisions would in any case come to an end on 30 June 1981, was very anxious to obtain a voluntary arrangement thereafter, and hence to secure the applicant's participation in the planned talks mentioned above. Therefore, on 19 March 1981 the Chef de Cabinet of the Member of the Commission responsible for quota provisions, acting for and on behalf of the latter — the applicant employs the legal term “as agent” — telephoned the applicant and obtained its undertaking to participate, by means of the promise that, by way of compensation so to speak, for the disadvantages which the applicant expected from the new system, the problem resulting from the applicant's having exceeded its production quota in the first quarter of 1981 would be solved. The applicant, which in reliance upon that promise had also refrained from submitting the quota decision concerning the first quarter of 1981 to the Court of Justice, accordingly joined in the planned talks, which even achieved a measure of agreement. In the circumstances, the applicant maintains, the Commission cannot unilaterally repudiate the arrangement concluded and impose a fine on the applicant without solving its problem.

I understood from the Commission during the oral procedure that it does not dispute that the aforementioned Chef de Cabinet spoke to the applicant about solving its problem. However, it broadly takes the view that, since Article 9 makes fines mandatory whenever production quotas are exceeded, there was absolutely no possibility of promising that no fine would be imposed when the quota had been exceeded, and the inadmissibility of the objection — for lack of conclusive evidence — was thereby demonstrated. In addition, the Commission points out that it is not really possible to identify what it was that had allegedly been promised, and that the hypothesis of a binding undertaking is negated by the absence of the necessary precision required by administrative law and thus by the absence of any intention to be bound. The Commission moreover denies that the Member of the Commission responsible for the quota provisions instructed his Chef de Cabinet in the manner alleged, and contends that — even supposing that the latter wished to make a binding promise — attention should at least be paid to case-law, according to which the verbal assurances of officials have to be notified by the competent authorities. Finally, proceeding on the assumption that the solution of the applicant's problem was promised in the form of higher quotas, no promise to that effect could, in any event, be regarded as valid, on the ground that it was not reduced into writing as required.

4.