The Applicability of the ECSC-Cartel Prohibition (Article 65) During a “Manifest Crisis”

The Commission and the Council have found that the steel industry of the Community is facing a “manifest crisis” within the meaning of article 58 of the European Coal and Steel Community (ECSC) Treaty. Factors that have led to this crisis include structural peculiarities of the steel industry, an increase in production costs, a decrease in demand for steel and steel products, and the resulting excess capacity in steel mills. A majority of the Member States have attempted to protect their national steel industries from the economically mandated cutback in production capacity through substantial subsidization. International competition has thus degenerated, in significant respects, into competition through subsidies. The anti-subsidy provisions of article 4 of the ECSC Treaty have done nothing to prevent this development, but the reasons for their ineffectiveness are not the subject of this Article.

The collapse in steel prices that has resulted from excess capacity and efforts by undertakings to recover only a portion of their overhead costs, while abandoning any hope of full cost recovery, has induced the Community to accept certain measures aimed at combatting the structural crisis facing the steel industry. Among these measures are anticompetitive agreements among steel undertakings. The resort to concerted and voluntary action by undertakings has become a nearly routine component of the Community’s steel policy. Price-fixing agreements, the focus of this Article, mark the high point in this development. The behavior of Community intstitutions permits the conclusion that, under the current conditions in the steel market, they do not feel obligated to apply the prohibition of article 65 of the ECSC Treaty, which bars certain anticompetitive agreements. Instead, anticompetitive agreements have been required and officially employed as a means of combatting the crisis by Community institutions. Yet the legality of participation by undertakings in such agreements depends on whether such actions by Community institutions are legal.