1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 13 MARCH 1984 , SIDERADRIA SPA ( HEREINAFTER REFERRED TO AS ' SIDERADRIA ' ), WHOSE REGISTERED OFFICE IS IN ADRIA ( ITALY ), BROUGHT AN ACTION UNDER THE SECOND PARAGRAPH OF ARTICLE 36 OF THE ECSC TREATY REQUESTING THE COURT PRIMARILY TO DECLARE VOID THE COMMISSION ' S DECISION OF 26 JANUARY 1984 IMPOSING A FINE ON THE APPLICANT UNDER ARTICLE 58 ( 4 ) OF THE ECSC TREATY AND ARTICLE 12 OF 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 1981 , L 180 , P . 1 ) OR , IN THE ALTERNATIVE , TO REDUCE THE FINE IMPOSED .
2 ACCORDING TO THE DOCUMENTS BEFORE THE COURT , SIDERADRIA IS AN ITALIAN STEEL UNDERTAKING WHICH PRODUCES CONCRETE REINFORCING BARS . THE UNDERTAKING , WHICH WAS FORMED IN 1971 , EXPERIENCED DIFFICULTIES IN 1977 THAT WERE SO SEVERE AS TO COMPEL IT TO CLOSE DOWN ALTOGETHER UNTIL APRIL 1978 . SINCE THAT DATE IT HAS RESUMED ITS ACTIVITIES ON A SMALLER SCALE .
3 BY DECISION 1831/81 , THE COMMISSION ESTABLISHED A NEW SYSTEM WHEREBY QUOTAS ARE IMPOSED NOT ONLY IN RESPECT OF EACH UNDERTAKING ' S PRODUCTION BUT ALSO IN RESPECT OF THE PART THEREOF WHICH MAY BE DELIVERED ON THE COMMON MARKET ( KNOWN AS ' THE DELIVERY QUOTA ' ). THAT DECISION PROVIDES THAT SUCH QUOTAS ARE TO BE CALCULATED ON THE BASIS OF UNDERTAKINGS ' SALES DURING A GIVEN REFERENCE PERIOD .
4 THAT REFERENCE PERIOD COINCIDED IN PART WITH THE PERIOD IN WHICH SIDERADRIA WAS COMPELLED TO SUSPEND ITS ACTIVITIES . THAT IS WHY THE SALES FIGURES NOTIFIED BY SIDERADRIA TO THE COMMISSION RELATE IN THE MAIN TO 1979 . ON THE BASIS OF THOSE FIGURES , AND PURSUANT TO DECISION 1831/81 , THE COMMISSION DECIDED TO ALLOCATE TO SIDERADRIA FOR THE THIRD QUARTER OF 1981 A PRODUCTION QUOTA OF 9 798 TONNES AND A DELIVERY QUOTA OF 4 254 TONNES , WHICH WERE NOTIFIED TO IT ON 10 AUGUST 1981 .
5 IN OCTOBER 1981 , HOWEVER , SIDERADRIA APPLIED TO THE COMMISSION FOR AN ADJUSTMENT OF THOSE QUOTAS . IT POINTED OUT THAT THE FIGURES ON THE BASIS OF WHICH ITS PRODUCTION QUOTA HAD BEEN CALCULATED WERE INCORRECT . IT FURTHER MAINTAINED THAT THE DELIVERY QUOTA HAD BEEN FIXED BY REFERENCE TO A PERIOD IN WHICH IT HAD EXPORTED OVER 70% OF ITS PRODUCTION OUTSIDE THE COMMON MARKET AND THAT IT WOULD THEREFORE BE ABLE TO SELL WITHIN THE COMMON MARKET ONLY A VERY SMALL PROPORTION OF THE PRODUCTION ALLOCATED TO IT .
6 THE COMMISSION DID NOT TAKE ANY ACTION IN RESPONSE TO THAT LETTER . INSTEAD , ON 25 FEBRUARY 1982 IT INFORMED SIDERADRIA THAT IT HAD ESTABLISHED THAT DURING THE THIRD QUARTER OF 1981 THE PRODUCTION QUOTA HAD BEEN EXCEEDED BY 2 191 TONNES AND THE DELIVERY QUOTA BY 6 107 TONNES .
7 IN REPLY TO THE COMMISSION ' S LETTER , SIDERADRIA AGAIN APPLIED FOR AN ADJUSTMENT OF ITS PRODUCTION AND DELIVERY QUOTAS .
8 ON 19 AUGUST 1982 THE COMMISSION REPLIED THAT A DETAILED EXAMINATION OF SIDERADRIA ' S SITUATION HAD REVEALED THAT ITS PRODUCTION QUOTA FOR THE THIRD QUARTER OF 1981 HAD WRONGLY BEEN FIXED AT AN EXCESSIVELY LOW LEVEL . THE COMMISSION FIXED A NEW PRODUCTION QUOTA WHICH WAS GREATER THAN SIDERADRIA ' S PRODUCTION FOR THE THIRD QUARTER OF 1981 AND WHICH ABSORBED THE EXCESS ESTABLISHED BY THE COMMISSION .
9 MOREOVER , IN DECEMBER 1982 THE COMMISSION ESTABLISHED THAT SIDERADRIA FULFILLED THE CONDITIONS LAID DOWN BY ARTICLE 8 ( 2 ) OF DECISION 1831/81 , AS SUPPLEMENTED BY DECISION 2804/81/ECSC OF 23 SEPTEMBER 1981 ( OFFICIAL JOURNAL 1981 , L 278 , P . 1 ). THAT PROVISION AUTHORIZES THE COMMISSION TO ADJUST A DELIVERY QUOTA WHERE THAT QUOTA HAS , IN PARTICULAR , CAUSED SERIOUS DIFFICULTIES TO AN UNDERTAKING . IN THE CASE OF SIDERADRIA , HOWEVER , THE ADJUSTMENT DID NOT RELATE TO THE THIRD QUARTER OF 1981 . ACCORDINGLY , THE EXCESS ESTABLISHED BY THE COMMISSION REMAINED UNAFFECTED .
10 BY DECISION OF 26 JANUARY 1984 THE COMMISSION DECIDED TO IMPOSE ON SIDERADRIA ON ACCOUNT OF THAT EXCESS A FINE CALCULATED AT THE MAXIMUM RATE PROVIDED FOR BY ARTICLE 12 OF DECISION 1831/81 AND AMOUNTING IN THIS CASE TO OF 503 827 ECU .
11 THIS APPLICATION , THE ADMISSIBILITY OF WHICH IS NOT BEING CHALLENGED , IS DIRECTED AGAINST THAT DECISION . IN SUPPORT OF ITS APPLICATION , THE APPLICANT RELIES ON THREE SUBMISSIONS , NAMELY UNFAIRNESS OF THE CONTESTED DECISION , ERRONEOUS CALCULATION OF THE QUOTAS AND , FINALLY , BREACH OF THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATION . THE APPLICANT ALSO CHALLENGES THE AMOUNT OF THE FINE IMPOSED ON IT .
UNFAIRNESS OF THE CONTESTED DECISION
12 THE APPLICANT CONSIDERS THAT THE METHOD APPLIED TO CALCULATE THE QUOTAS IS UNFAIR IN THE CIRCUMSTANCES OF THIS CASE . THE RATIO BETWEEN PRODUCTION AND DELIVERY QUOTAS CORRESPONDS TO THE RATIO BETWEEN SALES WITHIN AND SALES OUTSIDE THE COMMON MARKET DURING THE REFERENCE PERIOD . IN THE APPLICANT ' S CASE , THE REFERENCE PERIOD COINCIDES WITH THE PERIOD IN WHICH IT EFFECTED THE BULK OF ITS DELIVERIES OUTSIDE THE COMMON MARKET . ACCORDINGLY , AS A RESULT OF THE METHOD OF CALCULATION USED , THE DELIVERY QUOTA ALLOCATED TO IT IS VERY SMALL . THAT SYSTEM IS UNFAIR BECAUSE , THE APPLICANT MAINTAINS , EXTERNAL MARKETS ARE NOW INACCESSIBLE . THE APPLICANT IS THEREFORE HAMPERED BY AN EXCESSIVELY SMALL DELIVERY QUOTA AND CAN SELL ITS PRODUCTS ONLY WITHIN THE COMMON MARKET . IT IS UNFAIR , IN ITS VIEW , FOR A FINE TO BE IMPOSED IN THOSE CIRCUMSTANCES .
13 THE APPLICANT ALSO CONSIDERS THAT IT FULFILLED ALL THE CONDITIONS LAID DOWN IN ORDER TO QUALIFY FOR AN ADJUSTMENT OF ITS DELIVERY QUOTA UNDER ARTICLE 8 ( 2 ) OF DECISION 1831/81 . IN SPITE OF REPEATED REQUESTS BY THE APPLICANT , THE COMMISSION REFUSED TO ADJUST THE DELIVERY QUOTA FOR THE THIRD QUARTER OF 1981 RETROACTIVELY .
14 THE COMMISSION EMPHASIZES MERELY THAT IN CALCULATING THE APPLICANT ' S DELIVERY QUOTA IT SCRUPULOUSLY APPLIED THE RULES IN FORCE . SINCE THE APPLICANT DID NOT CONTEST THE DECISION FIXING THAT QUOTA , IT CANNOT DO SO IN PROCEEDINGS INSTITUTED AGAINST A DECISION IMPOSING A FINE UPON IT . AS FAR AS THE APPLICATION OF ARTICLE 8 ( 2 ) OF DECISION 1831/81 IS CONCERNED , THE COMMISSION POINTS OUT THAT IT AGREED IN DECEMBER 1982 TO A SLIGHT ADJUSTMENT OF THE APPLICANT ' S DELIVERY QUOTA WITHOUT RETROACTIVE EFFECT . IF THE APPLICANT WAS NOT CONTENT WITH THAT ADJUSTMENT , IT SHOULD HAVE BROUGHT AN ACTION CHALLENGING THAT DECISION .
15 IT SHOULD BE NOTED THAT THE DECISIONS ADOPTED BY THE COMMISSION IN AUGUST 1981 AND DECEMBER 1982 , FIXING THE APPLICANT ' S DELIVERY QUOTA AND SUBSEQUENTLY ADJUSTING IT , HAVE BECOME DEFINITIVE IN VIEW OF THE APPLICANT ' S FAILURE TO CHALLENGE THEM WITHIN THE PERIOD PRESCRIBED BY THE TREATY . IT IS CLEAR FROM THE CONSISTENT CASE-LAW OF THE COURT THAT AN APPLICANT CANNOT , IN PROCEEDINGS FOR A DECLARATION THAT AN INDIVIDUAL DECISION IS VOID , RAISE AN OBJECTION OF ILLEGALITY AGAINST OTHER INDIVIDUAL DECISIONS ADDRESSED TO IT WHICH HAVE BECOME DEFINITIVE . ACCORDINGLY , IN SO FAR AS THE APPLICANT ' S SUBMISSION CALLS IN QUESTION THE DECISION FIXING THE DELIVERY QUOTA , IT MUST BE REJECTED .
ERRONEOUS CALCULATION OF THE DELIVERY QUOTA
16 THE APPLICANT CONTENDS IN THIS SUBMISSION THAT THE FIGURES NOTIFIED TO THE COMMISSION FOR THE CALCULATION OF THE DELIVERY QUOTA WERE INCORRECT . IN SUPPORT OF THAT CONTENTION , THE APPLICANT POINTS OUT THAT IT LEARNED THAT VALUE-ADDED TAX HAD BEEN PAID BY THE PURCHASERS OF ITS PRODUCTS . IN ITS VIEW , IT WOULD NOT HAVE BEEN NECESSARY TO PAY THAT TAX IF THOSE PRODUCTS HAD BEEN EXPORTED OUTSIDE ITALY . IT FOLLOWS THAT THEY WERE SOLD IN ITALY AND , CONSEQUENTLY , THAT THE DELIVERY QUOTA FIXED BY THE COMMISSION SHOULD HAVE BEEN HIGHER .
17 ACCORDING TO THE COMMISSION , THIS SUBMISSION ALSO CHALLENGES INDIRECTLY THE DECISION FIXING THE APPLICANT ' S DELIVERY QUOTA , WHICH HAS BECOME DEFINITIVE . MOREOVER , THE COMMISSION EMPHASIZES THAT MERE INVOICES ARE NOT CONCLUSIVE IN DETERMINING THE FINAL DESTINATION OF PRODUCTS .
18 THIS SUBMISSION MUST BE REJECTED . IN SO FAR AS IT CALLS IN QUESTION THE COMMISSION ' S FINAL DECISION FIXING THE DELIVERY QUOTA , IT IS INADMISSIBLE . MOREOVER , AT THE HEARING THE APPLICANT DID NOT ESTABLISH EITHER THAT THE PAYMENT OF VALUE-ADDED TAX BY PURCHASERS CONSTITUTED CONCLUSIVE EVIDENCE OF THE FINAL DESTINATION OF THE PRODUCT OR , CONSEQUENTLY , THAT THE VOLUME OF SALES OUTSIDE THE COMMON MARKET HAD BEEN MISCALCULATED . IN CERTAIN CASES , ITALIAN LEGISLATION REQUIRES PURCHASERS TO PAY VALUE-ADDED TAX EVEN WHERE THE PRODUCTS WHICH THEY BUY ARE ULTIMATELY INTENDED FOR EXPORT .
BREACH OF THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATION
19 THE APPLICANT COMPLAINS THAT THE COMMISSION FAILED TO WARN IT IN DUE TIME THAT IT HAD EXCEEDED ITS DELIVERY QUOTA . IN ADDITION , THE LONG PERIOD WHICH ELAPSED BETWEEN THE ESTABLISHMENT OF THE EXCESS AND THE DECISION IMPOSING A FINE RAISED THE APPLICANT ' S HOPES THAT A FAVOURABLE SOLUTION WOULD BE FOUND . IN THOSE CIRCUMSTANCES , THE IMPOSITION OF A FINE CONSTITUTES , IN ITS VIEW , A BREACH OF THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATION .
20 THE COMMISSION CONSIDERS THAT IT IS NOT UNDER A DUTY TO WARN UNDERTAKINGS , SINCE THEY ARE PERFECTLY WELL AWARE OF THEIR OBLIGATIONS AND OF THE PENALTY FOR NON-COMPLIANCE THEREWITH . FURTHER , THE DECISION IMPOSING THE FINES WAS PRECEDED BY DISCUSSIONS WHICH PREVENTED ANY FALSE HOPES FROM BEING AROUSED .
21 THE APPLICANT ' S FINAL SUBMISSION MUST ALSO BE REJECTED SINCE IT IS WRONGLY BASED ON THE PRINCIPLE OF THE PROTECTION OF LEGITIMATE EXPECTATIONS . THAT PRINCIPLE MAY NOT BE RELIED UPON BY AN UNDERTAKING WHICH HAS COMMITTED A MANIFEST INFRINGEMENT OF THE RULES IN FORCE . IT MUST BE ADDED THAT , IN THIS CASE , THE PRELIMINARY INVESTIGATION INVOLVED DISCUSSIONS . THE APPLICANT MUST NECESSARILY HAVE REALIZED THAT A FINE WOULD BE IMPOSED ON IT .
AMOUNT OF THE FINE
22 IN SUPPORT OF ITS CLAIM THAT THE FINE IMPOSED ON IT SHOULD BE REDUCED , THE APPLICANT EMPHASIZES IN THE FIRST PLACE THAT THE FIGURES NOTIFIED TO THE COMMISSION FOR THE CALCULATION OF THE APPLICANT ' S DELIVERY QUOTA WERE INCORRECT .
23 HOWEVER , EVEN ON THE ASSUMPTION THAT AN UNDERTAKING ' S OWN ERRORS CAN CONSTITUTE A MITIGATING FACTOR , THE APPLICANT ' S ARGUMENT MUST BE REJECTED SINCE IT HAS NOT ESTABLISHED THE EXISTENCE OF SUCH ERRORS .
24 THE APPLICANT ALSO EMPHASIZES , WITH REFERENCE TO THE DECISION OF DECEMBER 1982 WHEREBY THE COMMISSION AGREED TO ADJUST ITS DELIVERY QUOTA , THAT THE COMMISSION ACKNOWLEDGED , WHILST THE ADMINISTRATIVE PROCEDURE WAS IN PROGRESS , THAT THE DELIVERY QUOTA PREVIOUSLY FIXED WAS INADEQUATE . THE COMMISSION SHOULD , IN ITS VIEW , HAVE TAKEN THAT FACTOR INTO ACCOUNT IN FIXING THE AMOUNT OF THE FINE .
25 THE COMMISSION OBSERVES MERELY THAT THE RATE AT WHICH THE FINE WAS IMPOSED IS COMPATIBLE WITH THE WORDING OF THE RULES IN FORCE . IT ADDS THAT THIS WAS THE FIRST TIME THAT A FINE WAS IMPOSED FOR SUCH AN INFRINGEMENT AND THAT THERE WAS NO PRECEDENT FOR IT .
26 ARTICLE 12 OF DECISION 1831/81 PROVIDES THAT A FINE , GENERALLY OF 75 ECU , IS TO BE IMPOSED FOR EACH TONNE IN EXCESS . THAT AMOUNT MAY , HOWEVER , BE INCREASED TO 82.5 ECU WHERE AN UNDERTAKING HAS EXCEEDED ITS QUOTA BY 10% OR MORE , AS IN THIS CASE . THE COMMISSION IMPOSED THE MAXIMUM FINE ON THE APPLICANT .
27 IT IS TRUE THAT BY SELLING VIRTUALLY THE WHOLE OF ITS PRODUCTION QUOTA WITHIN THE COMMON MARKET THE APPLICANT EXCEEDED ITS DELIVERY QUOTA IN A PARTICULARLY FLAGRANT MANNER . HOWEVER , THE COMMISSION HAS ITSELF ACKNOWLEDGED THAT THE DELIVERY QUOTA IMPOSED ON THE APPLICANT CAUSED THE LATTER SERIOUS DIFFICULTIES . THE COMMISSION SHOULD HAVE TAKEN THAT INTO ACCOUNT IN FIXING THE RATE OF THE FINE . ACCORDINGLY , THE FINE SHOULD BE REDUCED FROM 503 827 ECU TO 400 000 ECU , OR LIT 548 920 000 .
COSTS
28 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE , THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . AS THE APPLICANT HAS BEEN UNSUCCESSFUL IN ITS MAIN SUBMISSIONS , IT MUST BE ORDERED TO PAY THE COSTS .
ON THOSE GROUNDS ,
THE COURT ( FIRST CHAMBER )
HEREBY :
( 1 ) REDUCES THE AMOUNT OF THE FINE IMPOSED ON THE APPLICANT FROM 503 827 ECU TO 400 000 ECU , OR LIT 548 920 000 ;
( 2)DISMISSES THE REMAINDER OF THE APPLICATION ;
( 3)ORDERS THE APPLICANT TO PAY THE COSTS .
