Court of Justice 16-12-1963 ECLI:EU:C:1963:56

1. With regard to the party to whom the Decisions are addressed

The applicant points out that she is not the ‘widow of the engineer A. Leone’ as is incorrectly stated in the contested Decisions, but the widow of the engineer Vittorio Leone. She leaves it to the Court's discretion to judge the significance of this error.

She adds that she has an infant daughter, Patricia, by her marriage to Vittorio Leone, who is a joint beneficiary in the estate, the administration of which was commenced on 4 March 1956 in pursuance of a will made on 26 January 1956 before a notary and in the presence of witnesses. The applicant cannot therefore accept the procedural position that she is the sole representative of the undertaking Acciaieria ing. A. Leone.

The defendant admits that the designation ‘widow of the engineer A. Leone’ is incorrect.

But in spite of the fact that her daughter is a joint beneficiary in the estate, the applicant is the only debtor as regards the contribution claimed from her by the High Authority. From the will dated 26 January 1956 (Schedule 1 to the statement of defence) it appears in fact that the applicant is the sole owner of the undertaking, as preferential legatee, and is bound to pay the debts and other liabilities from it.

2. With regard to the checks carried out by the S. A. Fiduciaire suisse

The applicant contests the validity of these checks for three reasons,

1. The High Authority has not proved that the delegation of powers in favour of the Fiduciaire Suisse was sanctioned by a decision as prescribed by Article 14 of the ECSC Treaty, which would have been subject to review by the Court. The High Authority has also infringed the fourth paragraph of Article 86 of the same Treaty, according to which:

   ‘Forthcoming visits of inspection and he status of the officials shall be duly notified to the State concerned.’

   Did the High Authority delegate its powers according to the correct procedure? According to the case law of the Court (Judgment in Case 9/56, Meroni, of 13 June 1958, Rec. 1958 (janvier — juillet), p. 42) ‘A delegation of powers cannot be presumed and … even when empowered to delegate its powers the delegating authority must take an express decision transferring them’. The applicant also refers to the opinion of Mr Advocate-General Roemer in Joined Cases 36, 37, 38, 40 and 41/58 (Rec. 1958-1959).

2. The applicant further submits that powers which may only be exercised by a person having the capacity of a public official cannot be delegated to private employees who do not possess such a quality. In other words the delegate of a public administration can only exercise the power of the delegator if he has himself the status of a public official.

   Therefore the High Authority's action in conferring on the employees of the Fiduciaire Suisse the task of inspecting Community undertakings at the latter's places of business is illegal.

3. Lastly the applicant attacks the failure to draw up minutes at the time when checks were carried out by the Fiduciaire Suisse in July 1958 and October 1960 and points out that the defendant has not proved the alleged refusal to produce the accounting documents requested. Moreover the applicant was not invited to be present at these checks and in particular at the one at which the representatives of Ferriere di Borgaro were said to have declared that they had destroyed the books of account of the undertaking Acciaieria ing. A. Leone.

Because of the absence of any minutes drawn up by a person having the authority of a public official the defendant's assertions are completely without value.

In respect or the arguments summarized under (a), (b) and (c) above, the defendant replies that the applicant is dealing with two quite distinct problems at the same time. The question of checks carried out by persons outside the High Authority (first paragraph of Article 47 of the ECSC Treaty) must be clearly distinguished from that relating to the grant of the powers of public officials to persons who carry out inspections on behalf of the High Authority (Fourth paragraph of Article 86 of the ECSC Treaty). The different sphere of application of each of these provisions was defined by the Court in its judgment of 4 April 1960 (Case 31/59, Brescia v High Authority, Rec. 1960, pp. 172 and 173) and confirmed in its judgment of 14 December 1962 in Joined Cases 5 to 11/62 and 13 to 15/62, Acciaierie San Michele and others v High Authority. In so far as the High Authority obtains information and carries out checks without using the powers specified in Article 86, only the provision of Article 47 can be taken into account; and it is obvious that in this case the inspectors did not present themselves as public officials and did not claim any of the prerogatives attaching to status as such.

The power of the High Authority to have checks made by a private company derives from the terms of the first paragraph of Article 47 and specifically from the words, ‘It may have any necessary checks made’. This sentence clearly means that the High Authority can confer on third parties the task of carrying out the checks. This interpretation is confirmed by Article 5 of the ECSC Treaty which prescribes a minimum of administrative machinery. In its judgment of 13 June 1958 (Case 9/56, Meroni v High Authority, Rec. 1958 (janvier-juillet), pp. 25 et seq.) the Court allowed delegation by the High Authority of executive powers to agencies governed by private law.

As to the failure to draw up minutes at the time of the inspections, the High Authority replies that, as it did not make use in this case of the power provided in the fourth paragraph of Article 86, there is no point in questioning whether the powers provided by that Article might be delegated and whether the procedural requirements for exercising those powers have been observed.

The High Authority maintains that the information obtained and the checks carried out in accordance with the provisions of Article 47 were certainly sufficient to entitle it to take the individual Decisions which were essential in order to apply the equalization scheme. The defendant admits that, as the checks were not carried out in accordance with the rules laid down by Article 86, the applicant could have presented evidence to the contrary rather than merely raising general objections. The Court could, furthermore, direct the applicant to produce the invoices relating to the electric energy consumed during the periods specified in the disputed Decisions together with an affidavit to the effect that the invoices represented the entire consumption. If, as Ferriere di Borgaro asserts, these documents were destroyed, nothing prevents the applicant from producing copies of the invoices supplied by the electricity supply company. If, even after such production, the Court considers proof of consumption to be inadequate, the defendant asks to be allowed to prove by the evidence of witnesses the accuracy of the figures on which the individual Decisions are based.

3. As to the reason for the adjustment of the applicant's declarations on the basis of an estimate

1. The applicant disputes the consumption figure of 10 137 900 kWh for the period from 1 February 1957 to 31 January 1958, which, according to the disputed Decisions, had been ‘calculated with the aid of the invoices of the electricity company’, and invites the defendant to prove the consumption figure and to indicate the data used to arrive at it.

   The defendant replies that it is not necessary for the High Authority to supply proof of the data forming the basis of the disputed Decisions in order to guarantee their legality. The public service has the power to make findings and the burden of proving their inaccuracy falls on those subject to its authority. The applicant can easily prove such inaccuracy by producing the invoices or, if these have been destroyed, duplicates supplied by the supply company.

2. The applicant also wholly disputes the consumption figure of 16 220 metric tons of ferrous scrap for the period from 1 October 1955 to 31 January 1957, obtained by way of extrapolation from the data taken from the documents submitted for the period from February 1957 to January 1958. She points out in this respect that the furnace did not necessarily operate as intensively during the period to which the extrapolation relates as during the reference period, and that there may have been periods of running-in or inactivity.

3. The applicant goes on to emphasize the differences between the letter sent to it by the defendant on 17 January 1962 (Schedule 6 to the application) and the disputed Decisions of 23 May 1962. She states that, despite the brief interval of three months separating these documents, the figures of the assessable tonnages and the corresponding debit balances contained in the letter of 17 January 1962 have been considerably increased in the Decisions of 23 May 1962 although those figures were calculated by the same inductive method. She submits from the above that there are no valid grounds for the Decisions.

   The defendant replies that the letter of 17 January 1962 was merely an act of courtesy and a precautionary measure with a view to obtaining from the applicant preliminary data in order the better to ensure the equitable nature of the decisions in the process of elaboration. But the disputed Decisions are not insufficiently reasoned, since they contain all the data necessary to justify the conclusions reached by the High Authority concerning the assessable tonnages and the sums due.

4. With regard to the inductive findings and the opinion of experts on this method

The applicant disputes the fact that the consumption of electric energy, by itself, is capable of enabling an exact inductive assessment to be arrived at of the amount of bought ferrous scrap consumed by a given iron and steel undertaking. She refers in this respect to the case law of the Court (Judgment of 14 December 1962 in Joined Cases 5 to 11/62 and 13 to 15/62, Acciaierie San Michele and others v High Authority).

The applicant also criticizes the minutes of the meeting of experts held on 13 February 1962 at the defendant's request (Schedule 2 to the statement of defence). She points out that the note prepared by the High Authority to serve as a basis for the experts' discussions has not been produced and it does not appear that the minutes of the meeting of 13 February 1962 and the graph of consumption attached to it were approved by the experts. She goes on to contest the experts' declarations appearing in the minutes and observes that there was not unreserved agreement on the figures proposed by the High Authority. The applicant produces a technical opinion drawn up at her request by six experts on 20 November 1962 (Schedule 1 to the reply). According to these experts, at the meeting of 13 February 1962, the subject of which was a problem concerning the smaller iron and steel undertakings, no representative of those undertakings in fact participated. In the applicant's opinion, her experts decisively refuted the concept on which the High Authority's calculation is based, stating that it can constitute only one of numerous factors to be checked. Hence the applicant asks the Court to appoint experts in order to establish ‘whether it is reasonable and justified to determine inductively the consumption of ferrous scrap in electric furnaces of small capacity exclusively by the method of calculation proposed by the High Authority and to deduce therefrom the exact sums owed by the applicant who is compulsorily subject to the equalization scheme’.

The applicant then disputes the defendant's statement that the criterion for calculating kWh per metric ton had been fixed in a way which was most favourable to the person subject to the levy and that consequently there could be no error as to an over-assessment but only as to an under-assessment. She points out that in this field one must be absolutely certain that calculations are uniform and not either too high or too low, since the equalization scheme is the joint concern of all the undertakings participating. She refers in this respect to the opinion of Mr Advocate-General Lagrange in Joined Cases 42 and 49/59, SNUPAT v High Authority (Rec. 1961. d . 178)

The defendant replies first by producing the preparatory note of 26 January 1962 for the meeting of experts on 13 February 1962 (Schedule 6 to the rejoinder) and the letters in which the experts approved the minutes of the meeting and the graph adopted by the High Authority (Schedules 1 to 5 to the rejoinder).

The High Authority states that as far as possible it checked the supporting documents, which moreover showed the inaccuracy of the monthly declarations supplied by the applicant relating to the consumption of ferrous scrap. But as it could only examine the book of ‘raw materials processed’, since the other documents had been destroyed, it had to use for checking purposes inductive factors, such as the consumption of electric energy. According to the defendant the consumption of electricity is a factor sufficient to justify an adjustment on the basis of an estimate. It is for the user to show that the usual ratio of energy to ferrous scrap does not apply to the furnace he uses by reason of its particular characteristics. In this sense one can say that energy consumption in only one of the factors on which the High Authority can base its assessment, that is to say, an exception to the general rule can be justified by taking account of other factors.

The defendant adds that the ratio applied by the High Authority, namely kWh per metric ton of steel produced, must be considered all the more equitable in that in its calculation account was taken of the extremes of electricity consumption in relation to the capacity of the furnaces.

As for the experts' opinion produced by the applicant, she does not dispute the validity of the criterion adopted but merely asserts that ‘the consumption of electric energy outlined by the curves of the graph prepared by the experts of the High Authority cannot be regarded as entirely valid’. This opinion is in keeping with that of the High Authority that, once the validity of a criterion or of a general rule has been well established, the presence of exceptional circumstances in any particular case which alter the rule must be established by the person who asserts their existence.

5. Was the High Authority obliged before taking the Decisions to give the applicant the opportunity to submit her comments?

The applicant alleges infringement of the first paragraph of Article 36 of the ECSC Treaty, according to which ‘before imposing a pecuniary sanction or ordering a periodic penalty payment as provided for in this Treaty, the High Authority must give the party concerned the opportunity to submit its comments’. In fact the request in the second of the individual Decisions in dispute to pay 186 432 125 Lire constitutes in her opinion a pecuniary sanction. She refers in this respect to the view of Mr Advocate-General Lagrange in his opinion in Case 15/57, Hauts Fourneaux de Chasse v High Authority (Rec. 1958 (janvier-juillet), p. 205) and the case law of the Court in its judgment of 13 June 1958 (Case 9/56, Meroni v High Authority, Rec. 1958 (janvier-juillet), pp. 26 and 27).

The defendant replies that the applicant is confusing ‘adjustment of the contribution payable’, which is at issue in this case, with ‘pecuniary sanction’. For the question of sanction to arise there must be non-performance of a legal obligation, whereas in the case of adjustment of the equalization contribution on the basis of an estimate it is a question of the quantitative determination of a legal obligation which must be observed. Sanctions can exist however in respect of equalization contributions. There is for example the sanction laid down in the third paragraph of Article 47 of the Treaty for undertakings which evade their obligations or knowingly furnish false information. This distinction was made in Article 15 of Decision No 16/58 which makes provision, on the one hand, for sanctions for inaccurate declarations and, on the other hand, for the adjustment, on the basis of an estimate, of declarations for which there is no reasonable basis.

1. Submissions and arguments common to Article 10 (b) and (d)

1. According to the applicant Decisions Nos 2/75 and 16/58 do not indicate the reasons for exempting the producers of special steel or alloy steel and those producing steel castings from the payment of the equalization contribution.

   The defendant replies that the High Authority must state the reasons on which its decisions are based when it exercises a discretionary power but is not bound to do so when it conforms with the provisions of the Treaty by merely applying such provisions in a direct and immediate manner. In addition, the reasons for excluding these kinds of ferrous scrap are by implication apparent from the very bases of the equalization scheme as can be ascertained from the statement of reasons on which the general Decisions of the High Authority are based.

2. The applicant states that, in order to extend exemptions from payment of contributions retroactively to the period between 1 April 1954 and 31 January 1957, the High Authority was bound to take the advice of the Council of Ministers (Article 53) and to take a decision (Article 15) subject to review by the Court.

   The defendant replies that, in adopting the Decisions in dispute, the High Authority complied with the practice followed at the time and that consequently the alleged retroactivity was a simple explanatory declaration of what had legitimately been done up to that time. In this case there is no question of any derogation and consequently the High Authority was in no way required to seek the assent of the Council of Ministers in establishing the rules relating to the equalization scheme. It would be otherwise if the High Authority had also wanted to apply the scheme to situations such as those referred to in Article 10 (b) and (d), thereby altering the normal conditions of competition.

3. The applicant alleges infringement of Articles 3 (b) and (c), 4 (b) and the third paragraph of Article 5 of the ECSC Treaty as well as of the fundamental principles of the equalization scheme and the Common Market. She refers in this respect to the opinion of Mr Advocate-General Lagrange in Joined Cases 42 and 49/59 SNUPAT v High Authority (Rec. 1961, p. 184). The defendant replies that these provisions of the Treaty have not been infringed in any way since the Decisions did not in fact derogate from the principle of equal treatment.

4. Finally the applicant alleges that there was misuse of powers arising from discrimination between undertakings, intervention capable of distorting normal competition, and the retroactive extension of derogations to the period from 1 April 1954 to 31 January 1957.

   The defendant replies as under (c) above, relying on the fact that the Decisions did not in fact derogate from the principle of equal treatment.

2. As to Article 10 (b)

The defendant replies first that the market in alloy scrap differs considerably from that in ordinary ferrous scrap. In fact alloy scrap contains precious metals (molybdenum, chromium, nickel, vanadium) and its price depends not only on that of ordinary ferrous scrap but also on that of its precious metals. The object of the equalization scheme is to overcome the difficulties of the ordinary ferrous scrap market and not to ensure a supply of precious non-ferrous metals. If alloy scrap had been included in the equalization scheme, the contributions of consumers of ordinary ferrous scrap would have served to obtain a diminution in the price of precious non-ferrous metals which are outside the scope of the ECSC Treaty. To exclude alloy steels from the equalization scheme is thus to apply the Treaty and not to derogate from it.

The defendant then points out that the tonnage of bought alloy scrap amounts to 300 000 metric tons per year compared with 13 million metric tons of ordinary ferrous scrap; consequently it represents a negligible amount (a yearly average covering 1960, 1961 and the first six months of 1962).

The applicant replies by first disputing the figure of 300 000 tons of bought alloy scrap per year, which she contrasts with the annual production of alloy steels. She then asks the Court to put the following question to the defendant: ‘What is the total tonnage of alloy steels which was exempted from the equalization contribution within the ECSC from April 1954 to March 1959 because it was declared as having been obtained from alloy scrap?’

Finally the applicant produces a set of documents intended to show that, contrary to the opinion of the defendant, the price of alloy scrap is only slightly higher than that of ordinary ferrous scrap.

The defendant replies first that the production of special steels is not related to the quantities of alloy scrap consumed, either because certain special steels cannot be used as alloy scrap, or because these steels are largely produced from ordinary scrap to which the alloys are added.

In reply to the applicant s question the defendant states that no tonnage of special steels has been exempted from equalization because the latter applies to the ferrous scrap used and not to the steel produced.

As for the market price of alloy scrap, the High Authority points out that the price to be added to that of ordinary ferrous scrap varies according to the percentage of alloy and that for alloy scrap with a 1 % nickel content the difference amounts to more than 15 dollars per metric ton.

3. As to Article 10 (d)

The defendant replies that steel for casting used by integrated foundries could not be subject to the payment of contributions, because otherwise the production costs of such foundries would have been higher than those of independent foundries, and this would otherwise clearly have resulted in an alteration of the normal conditions of competition. Such an exemption was the only means of preventing the general Decisions from giving rise to cases of discrimination prohibited by Articles 3 (b) and 4 (b) of the Treaty and of ensuring normal competitive conditions in accordance with the provisions of Article 5.

The applicant replies by putting forward statistics relating to the production of crude steel, ingots and castings in the Community (Schedule 2 to the reply) and statistics for the production of crude steel for castings by the method of production used by independent steel foundries in the Community (Schedule 9 to the reply). She states that, according to the above, the High Authority, in order to ensure normal competitive conditions between integrated and independent foundries, has paradoxically distorted the much more important conditions of competition between integrated foundries, casting foundries and steelworks.

The defendant replies mat, in order to appreciate the reasons for exemption and its legality, one cannot compare the total production of crude steel (ingots and cast steel for moulds) of integrated foundries with the production of independent foundries. Instead one must compare the cast steel for moulds from the integrated foundries with the cast steel from independent foundries. As can be seen from a table set out in Schedule 7 to the rejoinder, the two productions are at roughly the same level: it is precisely because of this that, in order to avoid placing the production of cast steel for moulds from integrated foundries at a disadvantage compared with the production of the independent foundries (the question is precisely that of two groups of manufacturers carrying on the same activity who manufacture the same products by the same methods of production using the same materials) and because the latter are not subject to the equalization contribution, it was necessary to exempt the integrated foundries from paying the contribution on ferrous scrap used for the type of production in question.