Action brought on 21 July 2011 - Hüttenwerke Krupp Mannesmann and Others v Commission

(Case T-379/11)

Language of the case: German

Parties

Applicants: Hüttenwerke Krupp Mannesmann GmbH (Duisburg, Germany), ROGESA Roheisengesellschaft Saar mbH (Dillingen, Germany), Salzgitter Flachstahl GmbH (Salzgitter, Germany), Thyssenkrupp Steel Europe AG (Duisburg, Germany) and voestalpine Stahl GmbH (Linz, Austria) (represented by: S. Altenschmidt and C. Dittrich, lawyers)

Defendant: European Commission

Form of order sought

annul the Commission Decision of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (C(2011) 2772) (OJ 2011 L 130, p. 1);

order the Commission to pay the costs of the proceedings.

Pleas in law and main arguments

The applicants challenge the Commission Decision of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council. ¹ They submit that this decision should be set aside in its entirety.

In support of their action, the applicants put forward six pleas in law:

1.    First plea in law: the product benchmark for sintered ore breaches Article 10a of Directive 2003/87/EC ²

The applicants invoke the illegality of the conditions governing product benchmarks set out in Annex I to the contested decision.

Incompatibility with Article 10a(2) of Directive 2003/87

The applicants submit that the determination of the product benchmark for sintered ore breaches Article 10a(2) of Directive 2003/87 on the ground that the Commission included a plant for the production of pellets when establishing the average performance of the 10% most efficient installations in a sector or subsector in the European Union as the starting point for determining the product benchmark. Pellets, however, are a different product from sintered ore, and for that reason plants producing pellets ought not to have been taken into account for the purpose of determining the 10% most efficient sinter installations.

Incompatibility with Article 10a(1) of Directive 2003/87

The determination of the product benchmark for sintered ore is also at variance with Article 10a(1) of Directive 2003/87, as the Commission corrected data when determining the product benchmark for sintered ore. This, it is submitted, is not in line with the criteria for determining benchmarks which are laid down in Article 10a(1) of Directive 2003/87.

2.    Second plea in law: the product benchmark for hot metal breaches Article 10a of Directive 2003/87

The determination of the product benchmark for hot metal, the applicants submit, also breaches Article 10a of Directive 2003/87, as the Commission did not take into account the full carbon content of the residual gases resulting from iron and steel production in respect of their use for electricity generation, but carried out reductions in the amount of approximately 25%. It follows from the wording of the second sentence of the third subparagraph of Article 10a(1) of Directive 2003/87, from the general structure and purpose of that directive, and from its historical construction, that the Commission is not entitled to carry out such reductions.

3.    Third plea in law: breach of the obligation under the second paragraph of Article 296 TFEU to state reasons

The applicants submit further that the Commission has failed to provide adequate reasons for its decision. The reasons given for the determination of the benchmarks are, it is submitted, deficient. Nor has the Commission provided proper grounds for the reservations which it has expressed concerning possible distortions of competition. This amounts to a breach of the second paragraph of Article 296 TFEU.

4.    Fourth plea in law: infringement of the principle of proportionality

The contested decision, the applicants submit, also infringes the principle of proportionality with regard to the determination of the benchmarks for sintered ore and hot metal.

5.    Fifth plea in law: infringement of the principle of equal treatment

The applicants further allege an infringement of the principle of equality.

6.    Sixth plea in law: need for a declaration that the contested decision is invalid in its entirety

The applicants express the view that the decision must be annulled in its entirety on the ground that, in the event of a declaration of invalidity confined exclusively to the benchmarks for sintered ore and hot metal, a fallback method would, pursuant to the rule in Article 10(2)(b) of the contested decision, in conjunction with Article 3(c) thereof, automatically become applicable for the allocation of free allowances. This, the applicants submit, would have the result of affecting them even more adversely than if the Commission's incorrect benchmark values were to be applied for sintered ore and hot metal.

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¹ - OJ 2011 L 130, p. 1.

² - Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32).