Court of Justice 16-11-1983 ECLI:EU:C:1983:329

I — Facts and written procedure

By Decision No 2794/80/ECSC of 31 October 1980 (Official Journal 1980, L 291, p. 1), the Commission of the European Communities established a system of production quotas for steel undertakings. Pursuant to that decision, the Commission allocated production quotas to Thyssen AG, Duisburg, for the fourth quarter of 1980. Those quotas, which were notified to Thyssen on 3 November 1980, included a quota for products in Group I (hot-rolled wide and narrow strip) which was fixed at 1 159 701 tonnes.

By a telex message of 11 November 1980 Thyssen informed the Commission that, in its opinion, the latter quota had been incorrectly determined.

The Commission recognized that an error had been made in the calculation of the quota and, by a decision of 11 December 1980, which was notified to Thyssen on 17 December 1980, it increased the quota to 1 227 736 tonnes.

In the first quarter of 1981 Thyssen exceeded by 3 851 tonnes the quarterly production quota allocated to it by the Commission for products in Group I. The quantity produced in excess of the quota was supplied to Stahlwerke Bochum, a producer of electrical sheet.

On 11 June 1982 the Commission imposed on Thyssen, on the ground that it had exceeded the quota, a fine of 288 825 ECU, which is to say 75 ECU per tonne of excess production.

On 24 July 1982 Thyssen instituted proceedings to contest that decision.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry. However it requested the parties to provide it with certain information before the hearing and to answer certain questions.

The Court also decided, pursuant to Article 95 (1) and (2) of the Rules of Procedure, to assign the case to the Fourth Chamber.

II — Conclusions of the parties

Thyssen claims that the Court should :

1. Declare that the defendant's decision of 11 June 1982, addressed to the applicant and received by it on 18 June 1982, concerning a fine imposed on the applicant pursuant to Article 58 of the ECSC Treaty is void; and

2. Order the defendant to pay the costs.

The Commission contends that the Court should:

1. Dismiss the application; and

2. Order the applicant to pay the costs.

III — Submissions and arguments of the parties

In its first submission, Thyssen claims that it was fined for exceeding a quota established in respect of a product which would not have been included within the quota system if Article 58 of the ECSC Treaty had been correctly applied. In its opinion, the Commission's general decision, Decision No 2794/80, which constitutes the basis for the decision imposing the fine, should have exempted from quotas both electrical sheet and the raw materials (hot-rolled wide strips) intended for the manufacture thereof. By not granting those products exemption, the decision infringes a number of rules and principles of Community law and should therefore be regarded as invalid.

In that regard, Thyssen observes, in the first place, that the Commission made an incorrect appraisal as regards the existence of a “manifest crisis”, within the meaning of Article 58 (1) of the ECSC Treaty, in a market such as that in electrical sheet which has been stable and well-organized for several years. In the absence of a manifest crisis, the conditions for the establishment of a quota system are not fulfilled.

Since the demand for the raw materials intended for the production of electrical sheet is strong, the extension to those raw materials of the general reductions in production inevitably leads to a serious shortfall in supply to manufacturers of electrical sheet; that is incompatible with Article 3 (a) of the ECSC Treaty, which provides that the institutions are to “ensure an orderly supply to the common market”. Since production is thus artificially kept below demand, consumers are obliged to deal with manufacturers established in nonmember countries or with producers of substitute materials, which leads to a permanent weakening of the market. That is contrary to Article 3 (d) of the Treaty, which entrusts the institutions with the task of ensuring “the maintenance of conditions which will encourage undertakings to expand and improve their production potential”.

Moreover, the general decision contravenes the principle of equal treatment laid down in Article 4 of the Treaty by providing in Article 6 for the exclusion from the quota system of certain products, such as tubes and tinplate, which were in a similar market situation to electrical sheet. It also produced adverse effects on employment in the undertakings concerned, whereas the second paragraph of Article 2 of the Treaty expressly requires the Community to safeguard continuity of employment. It is difficult to understand to what end the Commission sacrificed security of employment. In any event, it was certainly not in pursuance of the fundamental objective of Article 58, namely the adjustment of excessive production to an excessive decline in demand, since the Commission was unable to establish any decline in demand for electrical sheet.

Finally, the Commission adopted the general decision. without gathering sufficient information on the state of the market in electrical sheet, contrary to Article 58 (2) of the ECSC Treaty.

The Commission raises first of all an objection of inadmissibility as regards the first submission on the ground that the legality of a general decision such as Decision No 2794/80 cannot be contested under the third paragraph of Article 36 of the ECSC Treaty in the absence of a direct legal connection between that decision and the contested decision. There is no direct legal connection between Decision No 2794/80 and the decision imposing the fine. The applicant would be entitled to claim that Decision No 2794/80 was partially unlawful only if it had challenged — and it did not — the decision fixing the quota for the first quarter of 1981.

In reply, Thyssen maintains that its submission is admissible under the third paragraph of Article 36 of the ECSC Treaty on two grounds :

First, since the Court is asked to consider whether a fine imposed for exceeding a production quota is justified, it is necessary to determine whether the quota in question could be fixed validly under Community law;

Secondly, it is clear from previous decisions of the Court that submissions challenging decisions of a general nature are admissible if they are directed against provisions on which the contested individual decision was based. In the present case, the unlawful inclusion within the quota system of raw materials intended for the manufacture of electrical sheet manifestly constitutes the basis for the decision imposing a fine on the applicant, inasmuch as the latter decision was based solely on the additional production of those raw materials.

As regards the substance of the submission, the Commission takes the view that it is not possible to assess the existence of a manifest crisis within the meaning of Article 58 (1) of the ECSC Treaty if only certain steel products or certain sectors of the market are considered. That assessment can be made only on the basis of a comprehensive appraisal of the prevailing economic situation on the market in steel. Furthermore, under Article 58 (2), the Commission is required to establish quotas “on an equitable basis”. If the only products included within the quota system were those which are difficult to sell, undertakings manufacturing largely or exclusively products which are easy to sell would gain an unjustified advantage.

An exception may be made only if it is shown that the exclusion of a product from the quota system does not affect the balance between products which are difficult to sell and those which are relatively easy to sell. The market surveys undertaken by the Commission before the introduction of the system of production quotas did not allow such a clear conclusion to be drawn as regards electrical sheet. In particular, the discussions which took place in September and October 1980 between the Commission, the undertakings and associations of undertakings, in accordance with Article 58 (2) of the ECSC Treaty, did not make it possible to establish clearly whether there was any justification for excluding materials intended for the manufacture of electrical sheet from the system of production quotas. Only later did it emerge from a survey of market trends that raw materials intended for the manufacture of electrical sheet could be accorded the same treatment as tinplate and tubes.

In the Commission's view, since raw materials intended for the manufacture of electrical sheet were included within the quota system in order to satisfy the requirement that there should be an equitable apportionment of the burdens resulting from the quota system, the principle of equal treatment has in no way been contravened.

The Commission observes that the objectives set out in the second paragraph of Article 2 and in Article 3 (a) and (d) of the ECSC Treaty obviously cannot all be achieved in full and at the same time when a system of production quotas is introduced; the fact that they have been achieved only in part cannot be relied upon to contest the legality of that system.

The second submission put forward by Thyssen may be subdivided into two parts.

In the first part of its submission, Thyssen contends that the difference between the quota notified to it on 3 November 1980 and the higher quota resulting from the adjustment notified to it on 17 December 1980 must be regarded as an additional quota. It may thus be established that the applicant used up its initial quota (1 159 701 tonnes), together with the tolerance margin of 3% permitted by Article 8 (1) of Decision No 2794/80 (amounting to 34 791 tonnes), and that, on the basis of the adjustment notified to it on 17 December 1980, it was entitled to produce a further 70 076 tonnes (the additional quota of 68 035 tonnes plus the tolerance margin of 2 041 tonnes). Since only approximately 57 700 tonnes of that quantity were used up in the final quarter of 1980, Thyssen considers that Article 8 (2) of Decision No 2794/80 authorized it to carry over to the first quarter of 1981 up to 50% of the unused portion of the quota. The portion which it was permitted to carry over is sufficient to cover the quantity, namely 3 851 tonnes, which the applicant is alleged to have produced in excess of the quota.

In reply, the Commission states that the decision of 11 December 1980, which was notified to the applicant on 17 December 1980, did not allocate an additional quota to the applicant. Instead it must be regarded as a twofold measure providing for the revocation of an incorrect quota and fixing the correct quota for the fourth quarter of 1980. Accordingly, only a single quota is involved, that fixed on 11 December 1980, which amounted to 1 227 736 tonnes. Thyssen, whose production in the final quarter of 1980 amounted to 1 251 895 tonnes as regards products in Group I, used up that quota and part of the 3% tolerance margin. In those circumstances it cannot rely on Article 8 (2) of Decision No 2794/80 to justify carrying over the unused portion of the tolerance margin, since that provision expressly lays down that only undertakings which have not exhausted their quotas may carry over the unused portion to the following quarter.

In the second part of its second submission, Thyssen maintains that the carrying over of the quantity which it was unable to produce in the final quarter of 1980 as a result of the belated notification of the definitive quota must be permitted, irrespective of Article 8 (2), by virtue of the principle that the administration is bound by its own acts and by virtue of the general principle of good faith.

According to the principle of administrative law to the effect that the administration is bound by its own acts, which is also recognized in Community law, the Commission must adhere, in the present case, to the practice which it has followed in comparable cases. That practice, as is apparent from various Commission decisions (decision of 6 April 1981 addressed to Thyssen concerning the carrying over of an increase, notified on 26 January 1981, in the quota for the fourth quarter of 1980; decision addressed to Ferriera Padana concerning the carrying over of an increase, notified on 18 December 1980, in the quota for the fourth quarter of 1980) consists in authorizing an undertaking to carry over in their entirety to the following quarter such portions of quotas as the undertaking concerned was unable to use up owing to the Commission's delay in notifying it of the quotas for a given quarter. The undertakings concerned were able, as a result of those decisions, to make full use of the quota increase belatedly notified to them, including the corresponding tolerance margin. It is of no importance, contrary to the view expressed by the Commission, whether the quota was increased shortly before the expiry of the quarter in question or after its expiry. In both cases, belated notification of the adjustment prevents the undertaking concerned from producing the quantity which it would otherwise have been able to produce. Furthermore, in the case of Ferriera Padana, the undertaking was permitted to carry over the unused portion of the quota, even though the conditions prescribed by Article 8 (2) of Decision No 2794/80 were not fulfilled.

The Commission contends that Thyssen has failed to establish the existence in Community law of the principle that the administration is bound by its own acts. Furthermore, even if there is such a principle in Community law, it may be applied only in relation to decisions of a discretionary nature. In the present case, the decision in question was of a mandatory nature. The Commission did not enjoy any discretion in fixing the production quota relating to Group I for the first quarter of 1981.

Moreover, the two cases referred to by Thyssen are not comparable to the present case since in neither of those cases had the quotas been used up in full, whereas the applicant had already exceeded its quota during the fourth quarter. The Commission could not allow the unused portion of the tolerance margin to be carried over since to do so would have amounted to a distortion of Article 8 (2) of Decision No 2794/80, which authorizes only portions of a quota to be carried over.

Thyssen also observes, in the alternative, in the event of the Court's taking the view that the production of the contested 3 851 tonnes did indeed constitute a breach of the quota, that the Commission's action in imposing a fine on that account constitutes a misuse of power. That fine penalizes an act by which the applicant merely offset, at least in part, the effects of a discriminatory error in the calculation of the quotas for which the Commission alone is responsible. The Commission's attitude clearly offends against the principle of good faith, which is recognized in Community law.

The Commission's error prevented Thyssen from exploiting to the full the production possibilities granted to it under Decision No 2794/80 and from supplying certain quantities of products which had been ordered from it, inter alia by Stahlwerke Bochum (hereinafter referred to as “SWB”). The applicant therefore sustained a loss in respect of which it is entitled to claim compensation from the Commission.

In the first quarter of 1981, Thyssen was able, as a result of its own efforts, to offset part of that loss in a specific instance which, moreover, was known to the Commission and in respect of which the Commission had accepted the need for a solution.

Whilst acknowledging that there can be no question of claiming a right to compensation for any difficulties occasioned by the Community, Thyssen maintains that the principle of good faith forbids the Commission to impose a fine on the applicant merely because the latter sought to mitigate the loss with which it was threatened as the result of an error committed by the Commission itself.

As regards the reality of the loss, Thyssen maintains that owing to the failure to supply SWB and its buyers during the first quarter of 1981 with 3 851 tonnes of raw materials they sustained serious losses which were borne by Thyssen.

Thyssen also maintains that, as a result of the belated notification of the quota, it would have sustained a direct and unavoidable loss if it had not supplied the quantity produced in excess of the quota. Contrary to the opinion expressed by the Commission, Thyssen could not have exceeded the initial quota and the tolerance margin before receiving notification of the increase in the quota, even though it considered the initial quota to have been miscalculated. Its internal assessment did not constitute a sufficient basis for disregarding a binding quota notification.

The Commission considers it impossible to infer from the principle of good faith that the contested decision is unlawful. It points out that Article 9 of Decision No 2794/80 provides that a fine must be imposed where the quota is exceeded. Since the Commission has no discretion in the matter, the applicant cannot rely on the argument that the Commission's discretion should be curtailed on equitable grounds based on the principle of good faith.

The Commission denies the existence either of a loss or of a direct causal link between the alleged loss and the fact that the decision increasing the quota for the fourth quarter of 1980 was not received by the applicant until 17 December of that year.

The Commission observes that Thyssen referred only to the consequences to which SWB would have been exposed if the quantity of raw materials supplied to it had remained within the limits of the production quotas fixed by the Commission. The applicant has not, however, furnished any information regarding the extent to which the difficulties confronting SWB caused the applicant also to sustain a loss.

Furthermore, even on the assumption that a loss was sustained, Thyssen has failed to establish that such loss was occasioned by the belated notification of the quota. In the Commission's opinion, if the applicant had planned its production properly it would have been able to produce the quantity in question without difficulty.

The argument that the applicant was confronted with an accumulation of unfulfilled orders and the need to comply with the percentage reduction in supplies imposed in such cases by German legislation is too vague to sway the defendant. The figures for Thyssen's daily production in December 1980 show on the contrary that the 3 851 tonnes could also have been produced within the limits of the quota initially set too low. Thyssen did not begin to use the 3% tolerance margin until 16 December 1980.

Without exceeding that margin, it could without difficulty have produced before 17 December 1980 the 3 851 tonnes of raw materials required by SWB for the production of electrical sheet.

In its third submission, Thyssen maintains that the Commission, by imposing a fine on it, contravened both the principle nemo contra factum suum venire potest and the principle of the protection of legitimate expectation.

According to Thyssen, at a meeting which took place on 17 November 1980 the representatives of Otto Wolff AG, of Cologne, which together with Thyssen is SWB's parent company, explained to the Commission's representative the reasons why it was absolutely necessary for Thyssen to supply SWB.

On that occasion it was agreed, in view of the impossibility of providing for exemptions forthwith, to adopt a pragmatic solution which, without prejudice to the express exemptions to be provided for, would at the same time take account of the need for a satisfactory settlement.

The Commission stated that it was prepared tacitly to accept production in excess of the quota without adopting an express decision granting exemption. That agreement was referred to by Mr Remy, a member of Otto Wolff's board of directors, in a letter of 3 December 1980 which was addressed to the Commission and failed to evoke any adverse reaction from the latter. Expectations were thus aroused in the applicant and were reinforced by the attitude of the Commission's representatives, who, at a meeting held on 17 December 1980, agreed that the supplies of raw materials required by SWB for the manufacture of electrical sheet and furnished by the applicant were to be unconditionally guaranteed.

In Thyssen's opinion, “promises” of that kind are capable of arousing a “legitimate expectation” even if they are not transformed into an undertaking which is directly legally binding on the defendant.

The Commission contends that, since no promise to refrain from imposing a fine in the event of excess production was made by its officials at the meeting held on 27 November 1980, no such inference can be drawn from Mr Remy's letter of 3 December 1980. Moreover, at the meeting held on 17 December 1980, the Commission's officials had stressed that Thyssen was to supply SWB within the limits of the sufficiently large quota allocated for products in Group I.

The Commission adds that even if such promises were actually made they are invalid on legal grounds.

To begin with, a promise which is binding on the Commission can be made only by a competent authority, namely the Commission itself or a member of the Commission authorized to give such undertakings.

What is more, Article 9 of Decision No 2794/80 provides that a fine must be imposed if the quota is exceeded. Since the Commission has no discretion to refrain from imposing a fine, any promise to that effect is unlawful and cannot give rise to any legitimate expectation.

In its fourth submission, Thyssen contends that the Commission decision imposing a fine on it contravenes the principle of proportionality inasmuch as it fails to take account of the particular circumstances (the small quantity produced in excess of the quota, the absence of a manifest crisis in the relevant market, maladministration by the Commission in connection with the notification of the quotas, promises made by the Commission) which, according to the applicant, are the characteristic features of this case. Taken together, those circumstances show that this case is not a normal instance of production quotas being exceeded. In fact, there is an accumulation of unusual factors which warrants an exception being made to the rule since the effect of each of those factors is to mitigate the alleged infringement.

By imposing a fine in spite of those considerations, the Commission adopted an attitude manifestly in contradiction with the principle of proportionality.

The Commission emphasizes, in the first place, that under the first paragraph of Article 9 of Decision No 2794/80 it has no discretion to decide whether or not to impose a fine, nor is it at liberty to determine the amount thereof. Moreover, it adds that none of the factors relied upon by Thyssen is capable of calling in question the obligation which the first paragraph of Article 9 of that decision imposes on the Commission to penalize by the imposition of a fine any undertaking which exceeds its quota. Nor are those factors in combination with one another capable of calling in question that obligation. That is also the case as regards the amount of the fine. In particular, no reduction is justified by the fact that the quantity produced in excess of the quota was negligible, since Decision No 2794/80 already takes account of such cases by providing for a 3% tolerance margin.

In its fifth submission, Thyssen contends that the contested decision does not contain a sufficient statement of the reasons on which it is based and that it was adopted upon termination of a procedure in which fundamental rights were infringed.

In Thyssen's view, it is impossible to ascertain from the statement of reasons whether the Commission considered the arguments put forward by the applicant during the administrative procedure.

The Commission, on the other hand, maintains that it indicated in the statement of reasons that the applicant had expressed its views, both orally and in writing, on the charge that it had exceeded its quotas. This shows that the Commission appraised the facts and arguments relied upon by the applicant. The Commission is under no obligation to refer to all the details of that appraisal in the statement of reasons on which its decision is based.

In Thyssen's view, its fundamental rights were infringed because the Commission, at a hearing which took place on 15 January 1982, made a tape-recording of the proceedings without the knowledge of the applicant's representatives. That recording, made in breach of one of the fundamental human rights which the Court has held to form an integral part of Community law, should not have been used for the puposes of the decision adopted by the Commission.

The Commission points out that the recording was used merely to draw up the minutes of the hearing which were notified to the applicant by a letter of 1 February 1982 and on which the applicant expressed its views on 11 February 1982. No part of the Commission's decision is therefore based on that recording. The fact that the minutes were drawn up in writing and approved by the applicant deprives the question of the use of a recording made without the applicant's knowledge of any significance.

In its reply Thyssen advances a further argument to the effect that the decision imposing the fine should in any event be declared void in view of the absence of any fault on its part. The principle nulla poena sine culpa should, in the light of previous decisions of the Court, be regarded as forming an integral part of Community law. It is apparent from several factors, such as the promises made by the Commission to tolerate production in excess of the quota, the state of necessity in which SWB found itself, the belated notification of the quotas, the small quantity produced in excess of the quota allocated to the applicant and so on, that there was no fault on Thyssen's part capable of justifying the imposition of a fine. Furthermore, the fact that the Commission, on its own admission, did not even consider the question of fault must also be taken into account in connection with absence of a sufficient statement of reasons for the defendant's decision.

The Commission, on the other hand, maintains that the fine provided for by the first paragraph of Article 9 of Decision No 2794/80 is not penal in nature but has as its purpose merely to deprive the undertakings concerned of the advantage which they acquired unlawfully by exceeding the production quota. Accordingly, the application of the first paragraph of Article 9 of Decision No 2794/80 does not presuppose the existence of fault.

IV — Oral procedure

The parties presented oral argument at the sitting on 18 May 1983.

The Advocate General delivered his opinion at the sitting on 6 July 1983.