represented respectively by their managers,
HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, represented by its Legal Adviser, Erich Zimmermann, acting as Agent, assisted by Professor Konrad Duden and Heinz Rowedder, both Advocates at the Mannheim Bar, with an address for service in Luxembourg at its offices, 2 place de Metz,
Application for the annulment of certain provisions of Decision No 36/59 of the High Authority of
I. NOLD KG, a wholesale trader in coal and construction materials, Darmstadt, represented by its partner with personal liability, Erich Noldd, assisted by Georg Thomas, Advocate at the Frankfurt am Main Bar, and Josef Kübel, Advocate at the Bonn Bar, with an address for service in Luxembourg at the Chambers of Félicien Jansen, Huissier, 21 rue Aldringen,
HIGH AUTHORITY OF THE EUROPEAN COAL AND STEEL COMMUNITY, represented by its Legal Adviser, Erich Zimmermann, acting as Agent, assisted by Professor Konrad Duden and Heinz Rowedder, both Advocates at the Mannheim Bar, with an address for service in Luxembourg at its offices, 2 place de Metz,
Application for the annulment or, alternatively, for a declaration of the inapplicability of Article 6 (1) and (2) of Decision No 36/59 of the High Authority of
THE COURT
composed of: A. M. Donner, President, A. M. Delvaux (Rapporteur in Cases 36 to 38/59) and R. Rossi, President of Chambers, O. Riese and N. Catalano (Rapporteur in Case 40/59), Judges,
Advocate-General: M. Lagrange
Registrar: A. Van Houtte
gives the following
The
The
The facts may be summarized as follows:
By its Decisions Nos 5/56, 6/56, 7/56 and 8/56, dated
The High Authority, considering that its authorizations had not led to the expected results and in particular that the three joint selling agencies had applied a uniform sales system contrary to the provisions of the Treaty, decided to put an end to the sales system applied up to the present, while making provision for a transitional period. It thus granted the extension requested until
By its Decisions Nos 7/58, 8/58 and 9/58 of
Decisions Nos 16/57, 17/57 and 18/57 had set strict criteria for permitting wholesaler traders in coal to obtain their supples direct from the joint selling agencies in coal from the Ruhr. Articles 5 to 11 of decision No 17/59 alter the commercial rules and considerably relax the conditions required for direct supply to wholesalers.
Articles 12 and 13 of Decision No 17/59 confirm the decision of the Standards Commission, dated
Finally Article 14 of Decision No 17/59 organizes the control by the High Authority over the various organizations and mining companies concerned, with a view to verifying whether they keep within the bounds of the authorizations granted, and in order to examine whether a revocation or a modification of the authorizations is necessary for the purpose of reorganizing the sale of coal from the Ruhr.
By letter dated
On
On
It should also be borne in mind that the three joint selling agencies lodged an application for an interim measure (Case 19/59 R), namely suspension of the operation of Articles 11 (application of the quantitative criteria fixed by the High Authority for authorizing wholesalers to make direct purchasers from the joint selling agencies) and the second sentence of Article 14(2) of Decision No 17/59 (dispatch of officials of the High Authority with the duty of making inquiries concerning the reorganization of the methods of sale of coal from the Ruhr) until such time as the Court had delivered judgment in Cases 16/59, 17/59 and 18/59.
This request for a suspension of operation was dismissed by the Court (order of
On
Decision No 36/59, which forms the subject-matter of the present case, annuls, as of
The
The
The
The
The
Thus the High Authority takes the situation prior to the creation of the Common Market as a yardstick for the present rules and contravenes Article 65. The High Authority has manifestly failed to have regard to the provisions of article 65(2)(b). For the best of being
The
Speaking generally, the defendant argues first that under the provisions of Article 65 it is for the applicants, who ask for a restrictive agreement to be authorized, to establish on sufficient evidence that they come within the requirements laid down by the said article for obtaining the benefit of a derogation from the general principle whereby the agreements covered by Article 65(1) are prohibited. For the High Authority's task is merely to note or to find that the prescribed requirements are met and fulfilled in the particular case which is submitted to it. It ill befits the applicants to complain that the High Authority has not produced clear, relevant and concrete facts, proving that its decision is well founded, when they themselves have not produced sufficient factual evidence enabling the High Authority to find or to note that the evidence in question proves that the request for the authorization of a restrictive agreement is well founded.
Secondly, contrary to the applicants' assertion, the High Authority had the right and the duty, in setting the criteria determining the authorization of agreements, to refer to the experience of past years and to draw what seemed to it to be the right lessons therefrom, despite the fact that it had formally authorized the said agreements.
Finally, contrary to the opinion of the applicants, what matters in considering the question whether or not the old quantitative criteria are more restrictive than is necessary for the purpose of the commercial rules is the answer to the further question whether, by reason of lowering the rquirements of the criteria, a new improvement in distribution is achieved, as indeed it is in the present case, for the restrictive effect on competition must be limited to the strict minimum (Article 65(2)(b)).
After having thus put forward general considerations against the applicants' arguments, the defendant denies that the applicants' arguments, which would have it that the Treaty has been infringed, are at all relevant.
The old criteria were discarded by the High Authority because, first, they excluded a certain number of wholesalers of average size which had received direct supplies for a long time in the past, and, secondly, because the aforesaid old criteria compromised the independence of the three joint selling agencies. Thus the High Authority has found that because of their level the old criteria had a restrictive effect which was not necessary for the purpose of the joint-selling arrangement that is to say, the improvement of distribution. It is natural, contrary to what the applicants say, to take into consideration the results of a practice in force for a fairly long period before the establishment of the Common Market during which a limit of
The applicants complain that the High Authority has not taken into consideration the fact that the bringing into force of the new criteria did not noticeably alter the number of traders accepted as first-hand wholesalers compared with the previous rules and therefore the reduction in the level set by the criteria was to no purpose. This observation on the part of the applicants is surprising to say the least because it is in contradicton with all their allegations, and those allegations are to the effect that the number of first-hand traders is reduced.
On the question whether the quantitative criteria existing up till now may be opposed under Article 65(2)(b), the defendant asserts that this involves assessing a situation arising from facts or economic circumstances which are not subject to review by the Court unless the applicants establish that in this particular case there has been a manifest disregard for the Treaty or a misuse of powers. The applicants assertion that such is indeed the position because the contested decision has not been justified by a complete consideration of the circumstances or of important facts is totally unsubstantiated.
Finally, the applicants allege that the High Authority infringed Article 5 of the Treaty in refusing to authorize their agreement, thus exercising a direct action on the market which was not required by the circumstances. This complaint cannot be accepted because it is the joint selling agencies and not the High Authority that exercise a direct action on the market, and moreover, the second paragraph of Article 5 expressly confers upon the High Authority the task of ensuring the establishment, maintenance and observance of normal competitive conditions, and this is why it has refused to approve the proposed agreement, as it is incompatible with the requirements of Article 65(2) of the Treaty.
The defendant asserts that the applicants wrongly attack the case-law of the Court in Case 2/56. It is a fact that
Thus the High Authority could have purely and simply refused the authorization requested since the applicants have not produced evidence that their agreement fulfils the conditions set out in Article 65 (2) of the Treaty. Nevertheless the High Authority did grant the authorization, while altering the commercial rules in such a way as to remove their restrictive nature. Therefore, in order for the applicants to succeed they must prove that the old criteria do not have the restrictive effects prohibited by Article 65(2) of the Treaty. Moreover the only difference between the facts considered in Case 2/56 and in the present dispute is that in Case 2/56 a particular criterion (
The High Authority alleges that in taking into consideration the experience of the years preceding the establishment of the common market in coal and steel when setting the authorized criteria it did not necessarily contravene Article 65(2)(b) and (c). This is first because from that experience the High Authority only drew one of the numerous factors which it thought fit to take into account together with many others. A further reason why the said article is not necessarily contravened is that there would not appear to be any provision prohibiting the High Authority from making such an investigation in order to help it decide whether or not the criteria fixed in the contested decision, or those proposed by the applicants, meet the legal requirement that they must not be more restrictive than is necessary for improvement in distribution.
The High Authority argues that the applicants are mistaken in asserting that the test of being
In the alternative, the
The
The
The
The facts may be summarized as follows:
By Decisions Nos 5/56, 6/56, 7/56 and 8/56, the High Authority has authorized the coalmining undertakings of the Ruhr basin to sell their products jointly through three selling agencies and through certain common institutions.
By Decisions Nos 16/57, 17/57 and 18/57, it had reduced the quantitative criteria originally authorized for the acceptance of wholesalers as direct purchasers of coal from those joint selling agencies.
Since all the abovementioned decisions were due to expire on
By Article 6 of Decision No 17/59, the High Authority required the coal-mining undertakings of the Ruhr basin associated with the joint selling agencies to abandon the first criterion then applicable (the sale of
After the judgment delivered on
In its statement of defence, the
For this reason, the defendant is opposed to the admissibility of this claim, arguing that it is certainly inadmissible in so far as it calls for a declaration that the contested provisions are inapplicable to certain traders. The reason for this is that under Article 33 the Court may only annul the contested decisions. Moreover, according to the defendant, the other head of the claim originally submitted in the alternative (annulment of Article 6(1) and (2), in so far as that article excludes certain traders from obtaining supplies direct) is a matter concerning which an action for failure to act could have been brought under Article 35, but against which an application for annulment does not lie.
The applicant argues that in order to prove that the authorized rules meet the requirements set out at points (a) and (b), the High Authority ought to have based its reasons set out in the preamble on numerical data. In view of the fact that an improvement in distribution can only become apparent through an increase in sales or through a reduction in selling costs or through both at the same time, compared with the situation as it stood before the contested rules came in, the High Authority ought to have produced evidence of these matters by means of figures in the reasons for the said decision, instead of contenting itself with giving reasons of a general order. Similarly, in order to show that the authorized rules do not provide for restrictions which are more severe than is justified by their purpose, the High Authority ought to have justified the correctness of its action on the basis of numerical data which alone make it possible accurately to calculate the effects of the new rules and to explain why the quantitative criteria chosen by the High Authority, (
The applicant also denies that, as is claimed in the preamble to the contested decision, it is only traders distributing at least
The
The defendant states, furthermore, that it has already indicated in its preamble the reasons why the maintenance of the quantitative criteria established by Decision No 36/59 is liable to contribute to a significant improvement in distribution (cf. Part II, 6th recital). It has also explained why those criteria are not too restrictive. It has in fact stated the reasons that determined the choice of the chosen criteria: the necessity for the sales of coal of a first-hand trader reaching a given quantity; the line to be drawn between first-hand wholesalers compared with trade at lower levels; the finding that before the establishment of the common market a limit of
Starting from these premises, the applicant argues that:
According to the applicant, to bring about a strict separation between first-hand wholesalers and second-hand wholesalers is not what the joint selling agencies are trying to do. Their real purpose is to do away with the dividing line between producers and first-hand wholesalers by practically eliminating wholesalers independent of the collieries.
To these arguments the
The defendant adds that it was not possible to predict what the effects of the new rules would be with enough accuracy, particularly since not all traders who meet the requirements for acceptance as first-hand traders are willing to give up their activities as second-hand traders. As regards second-hand traders it is not possible to follow their sales because there are so many of them (about 500 in the Federal Republic). Nor do the joint selling agencies have this information because they only come into contact with first-hand traders.
Finally, the defendant again asserts that sufficient reasons stating why the new rules contribute to an improvement in distribution have been given in the preamble. However, it does not directly refute the arguments put forward on this point by the applicant in its reply.
The
Improvement in distribution is a condition precedent for authorization. The burden of proving that it is met therefore lies with the High Authority.
After mentioning the problem of the sale of brown coal, the applicant denies the proposition that a trader may be required to sell brown coal as well in order to be accepted as a first-hand trader.
It argues that the authorized commercial rules not only involve a restriction more severe than is necessary for their purpose, at least as regards the limit of
It seems a contradiction between the justification of the criterion of
It sees a further contradiction in the reasons given in Decision No 36/59 for the limit of
It asserts that the High Authority is not unaware of the fact that in practice coal sold in the Federal Republic comes exclusively from the Ruhr because other basins are too far away. The result of this is that the criterion of
With a view to refuting the arguments of the applicant, the
It stresses in particular that:
In support of its
In support of its right, in its capacity as a previous first-hand trader, to continue to obtain supplies direct from the joint selling agency, the applicant refers to German case-law and in particular to a judgment of the Bundessozialgericht. That judgment says that Article 14 of the Basic Law of the Federal Republic guaranteeing private property also extends to rights protected under paragraph 823 (1) of the German Civil Code, and in particular to a
The
As regards the reference to German law, the defendant also denies that the applicant has a personal right to obtain supplies direct from the joint selling agencies of the Ruhr on the basis of the German legal system. In fact German law does not impose any obligation to sell in the circumstances under discussion and therefore the applicant cannot have any right to make direct purchases from the joint selling agencies. Furthermore, the exclusion of the applicant from first-hand trading cannot in any way be assimilated to an expropriation. The High Authority states that at most one could consider Article 26 of the Law prohibiting restrictions on competition. According to the defendant, that provision establishes the same principle as the one set out in Article 65(2) of the Treaty, and thus it leaves it open to sales organizations to make direct access by wholesalers subject to objective quantitative criteria.
By letter of
By order of
The replies to the six questions were duly produced.
The procedure in each of the cases considered in this report followed the normal course and took place within the prescribed periods.
The joint selling agencies of the Ruhr, on the one hand, and the Nold undertaking, on the other, attack the same decision of the High Authority although by reason of different interests and for opposite purposes.
The submissions put forward by these applicants, although drawn up for divergent aims, are strictly speaking analogous.
In order to avoid the possibility that two different judgments might lead to discordant interpretations, the Court deems it expedient to join the cases in question so as to deliver a single judgment.
The applications brought by the joint selling agencies of the Ruhr were lodged in compliance with the prescribed formalities. Their admissibility is not disputed and does not give rise to any objection by the Court of its own motion.
Therefore they are admissible.
The application submitted by the Nold undertaking is in due form and has been lodged within the prescribed period.
The applicant has submitted two sets of conclusions, one as main conclusions and the other in the alternative.
Before examining the main conclusions it should be noted that the Nold undertaking has stated that its interest in the annulment of the contested decision would disappear or serve no useful purpose were its alternative claim for a derogation of the rules at issue in favour of previous first-hand traders to be accepted.
The applicant supports its arguments with German case-law on the interpretation of Article 14 of the Basic Law of the Federal Republic, which guarantees private property.
It is not for the Court, whose function is to judge the legality of decisions adopted by the High Authority and, as obviously follows, those adopted in the present case under Article 65 of the Treaty, to ensure that rules of internal law, even constitutional rules, enforced in one or other of the Member States are respected.
Therefore the Court may neither interpret nor apply Article 14 of the German Basic Law in examining the legality of a decision of the High Authority.
Moreover Community law, as it arises under the ECSC Treaty, does not contain any general principle, express or otherwise, guaranteeing the maintenance of vested rights.
In these circumstances, the alternative claim put forward by the Nold undertaking is not admissible, whereas the admissibility of the principal claim is not disputed by the defendant and does not give rise to any objections by the Court of its own motion.
The joint selling agencies and Nold, each in respect of the elements of the contested decision with which they are not content, put forward the submission of infringement of an essential procedural requirement, asserting that the necessary reasons are wanting or are faulty.
After prohibiting (Article 65(1)) cartels in a general way, the Treaty confers upon the High Authority (Article 65(2)) the power to authorize specialization agreements or joint-buying or joint-selling agreements, but subjects the exercise of that power to a finding by the High Authority that the conditions set out in subparagraphs (a), (b) and (c) of paragraph (2) are met.
That finding, by its very nature, comprises an assessment of the situation created by the economic facts or circumstances and, accordingly, is partially outside the jurisdiction of the Court.
The obligation to state specific reasons for decisions granting authorizations is rendered necessary and must be strictly observed by reason of the fact that review by the Court is limited and that the authorization requested is subject to the finding by the High Authority that the conditions set out in Article 65(2) exist and are met.
Those reasons must enable the interested parties and, in the event of legal proceedings, the court, to verify the factors by virtue of which the High Authority concluded that the conditions required for obtaining its authorization were met so as to be able to examine whether that conclusion was right both in fact and in law.
The reasons which led the High Authority to refuse authorization of this criterion are set out, generally, in the third, fourth, seventh and eighth recitals and, more explicitly, in the ninth recital in Part II of the statement of reasons.
It is evident that the combined effect of the criterion of
The agencies complain that the High Authority has omitted to state the reasons for which it did not even consider reducing this criterion.
Although it is true that the decision does not state explicit reasons on this point, it appears from the context of the decision that in the opinion of the High Authority the other two criteria suffice to ensure an appreciable improvement in distribution, such that the point of balance between the favourable and unfavourable effects of the agreement is best obtained by abolishing the criterion of
For these reasons the complaint is unfounded.
The Court considers that, in view of the interdependence of these two criteria, it is appropriate to examine the complaints concerning them together.
the application of such criteria is likely to improve the distribution of the fuels of a joint selling agency, in particular by preventing the distribution network from being insufficiently distended (cf. fifth and sixth recitals); the criterion of therefore the said criteria satisfy the conditions required by Article 65(2)(a) of the Treaty and they contribute to a substantial improvement in the distribution of fuels (cf. fourth recital); generally speaking, and taking into account experience acquired during the course of the last few years, the amounts of the tonnages proposed by the agencies tend to give rise to commercial effects which are more restrictive than is necessary for an improvement in distribution (cf. third, fourth, seventh, and'eighth recitals); the effect of the amount of the reduction of the amount of therefore it was necessary to reduce the criteria proposed by the agencies because they were more restrictive than was necessary for the purpose of the agreements in question and because they made it possible for either the agencies or the distributors to control or limit the outlets of an important part of the produce (cf. fourth, seventh and eighth recitals).
It is therefore necessary to proceed to a more searching inquiry based on the following considerations:
From this it is to be concluded that in the opinion of the High Authority the specific purpose of the criterion of Turning to another matter, the High Authority, in its answer to the fifth question put to it by the Court on In that same document it is asserted that It appears from that explanation that the distinction between first-hand trading and second-hand trading does not correspond to objective technical or economic requirements, but only to a traditional practice. The advantages which the agencies may derive from trading with the lowest possible number of wholesalers do not constitute a sufficient reason to justify the restriction which is thereby imposed on trade, particularly since the very purpose for which the selling agencies have been created is to take away from the mines the effort involved in organizing the sale of their products on a commercial basis and their function, which is to furnish wholesalers with supplies, constitutes the essential reason for their authorized joint-selling agreement. Turning to another point, the applicant Nold argues that in fact the limit of In the reasons given for the contested decision, the High Authority had found that the criterion of The independence of the three agencies is an essential prerequisite of the authorizations for joint sales under discussion. Any restriction liable to jeopardize it must be prohibited. The criterion of In effect, the authorized agreements tend, through the mechanism of the Thus, through the combined effect of the three parallel agreements, the agencies mutually favour each other, and this is contrary to that competition which ought to exist between them and which is the very basis for the authorization granted. Although it appears from information produced by the defendant in its answers to the questions put by the Court that a certain number of accepted traders have not been obliged to get themselves entered in the books of the three agencies in order to achieve the limit of Since that possibility, or advantage, is not open to traders who only purchase coal, the latter are in most cases forced to purchase at least The Court, without judging the soundness of that criterion, is of the opinion that more specific and fuller reasons should be forthcoming before it is applied. The statement of reasons does not include any worthwhile information on this point. It results from the foregoing that the maintenance of the criterion of Therefore the complaint put forward by the agencies on this point must be accepted and upheld. This line of reasoning is irrelevant. The mere reference to rules in force prior to the establishment of the Common Market is not conclusive because it is obvious that noticeably different situations are involved, and that without specific justification it would be wrong to treat as on the same footing: a set of rules governing a national market and a set of rules governing a considerably enlarged market; a set of rules adopted at a time of normal supply and demand or even of scarcity with a set of rules adopted in a period of plenty; a set of rules established under an occupation regime and a set of rules envisaged in a period of normal political conditions. Since the reduction of the criterion of It therefore becomes superfluous to examine the complaint put forward by Nold against the same criterion.
Taking into account the grounds set out above, it is not necessary to examine the other complaints made by the applicant parties with the exception of the complaints made by the agencies concerning the criterion of
The High Authority may only authorize specialization agreements or joint-buying or joint-selling agreements if it finds that the requirements laid down by Article 65(2) exist and are met.
The High Authority considered that it was its duty to abolish the criterion of
The High Authority, having justified that abolition by a sufficient and appropriate statement of reasons, has not infringed the provisions of Article 65.
The agencies have failed to furnish proof of their allegation.
The agencies allege in the alternative that there has been a misuse of powers by reason of the refusal of the High Authority to authorize the quantitative criteria in force prior to the contested decision. It is asserted that the High Authority has used the powers of authorization conferred upon it in order to attempt to impose a new set of commercial rules absolutely different from the former rules. It has thus used its powers for the illicit purpose of implementing a policy of aid to the middle classes, and this is contrary to Article 65, for that article cannot constitute a basis for an economic or social policy.
The defendant denies those allegations. It argues that in lowering the level of the quantitative criteria it has pursued one purpose only, namely conformity with Article 65 of the Treaty.
The allegation of the agencies cannot be entertained.
They do not produce proof that the new commercial rules have been imposed by the High Authority for a purpose other than that in respect of which powers of authorization have been conferred upon it by Article 65 of the Treaty.
Nothing proves, establishes or even suggests as against the High Authority that it pursued a policy of aid to the middle classes. No act is advanced in that regard by the agencies which gives a shadow of truth to their assertion. The fact itself that a rather small number of traders of average size can have access to the sources of production and are not excluded from direct supplies cannot of itself be evidence of a policy of aid to the middle classes. Moreover, such a policy could only be presumed from a sufficiently specific set of conditions and circumstances which are lacking in the present case.
Therefore this submission is unfounded.
Article 69 of the Rules of Procedure provides that the unsuccessful party shall be ordered to pay the costs and that the Court may order that the parties shall bear their own costs in whole or in part where they fail respectively on one or several heads.
Since each of the parties has failed in part to substantiate its conclusions costs must be awarded as stated in the operative part of the judgment below.
THE COURT
hereby:
Donner
Delvaux
Rossi
Riese
Catalano
Delivered in open court in Luxembourg on
A. van Houtte
Registrar
A. M. Donner
President