March 11 (Bloomberg) -- ArcelorMittal told Europe's highest court the company suffered discrimination under European Union air-pollution rules that cover steelmakers while excluding industries with ``comparable'' greenhouse-gas emissions.

Lawyers for ArcelorMittal, the world's biggest steelmaker, claimed EU lawmakers were not justified in excluding the aluminum and chemical industries from 2003 legislation that capped emissions of carbon dioxide, the main greenhouse gas, in line with the Kyoto Protocol. The exclusion put ArcelorMittal and the steel sector at a ``complete disadvantage,'' the lawyers told the European Court of Justice in Luxembourg today.

``There is no difference between major steel plants, aluminum and plastics plants,'' Paul Lignieres, one of the lawyers for Luxembourg-based ArcelorMittal, told a 13-judge panel at the EU court, adding that ``500,000 tons of CO2 emitted by steel plants are just as harmful as 500,000 tons of CO2 emitted by plastics plants.''

France's highest court sent the case to the EU tribunal last year, agreeing with ArcelorMittal that the ``objective justification'' for including steelmakers and not aluminum and plastic companies posed a ``serious difficulty.''

The legislation established the EU emissions-trading system starting in 2005. Under the program, the world's largest such market, businesses that exceed their emission quotas must buy permits from companies that emit less.

The European Commission, the EU's executive agency in Brussels, in January proposed adding the aluminum and chemicals sectors to the system starting in 2013 as part of a tightening of the regulations. In addition to steel, industries covered by the existing rules include electricity, paper and cement.

`Sudden U-Turn'

Arcelor's Lignieres, a lawyer at Linklaters LLP in Paris, contested the EU's inconsistency with the legislation, saying that ``by a sudden U-turn the commission now wishes to include the chemical industry in the system, disregarding its own criteria, which violates the principle of equal treatment.''

The commission, EU lawmakers and the French government said the industries concerned are not comparable and that extending the EU system at the time to the aluminum and chemicals sectors would have made it ``very cumbersome'' and difficult to monitor.

The EU opted for ``a step-by-step approach,'' Luca Visaggio, a lawyer for the European Parliament, told the court today. Including from the start industries with a large number of installations, and sectors as varied as the chemicals sector would have complicated the system and harmed the EU rules' effectiveness.

CO2 Emissions

The decision at the time was to start by including sectors that were primarily responsible for CO2 emissions, the legislators' lawyer told the court. The steel sector had six times more emissions than the chemicals industry, said Kristien Michoel, a lawyer for the 27 EU governments. ``You cannot talk about comparable situations when direct CO2 emissions are concerned,'' Michoel said.

French units of Arcelor filed the claim in 2005 in France, before the company's merger with Mittal Steel Co., challenging the validity of the 2003 legislation.

Advocate General Luis Miguel Poiares Pessoa Maduro said he will publish his nonbinding legal advice on the case by May 21. The court is expected to rule within the following six months.

The case is C-127/07 Societe Arcelor Atlantique et Lorraine and others v Premier ministre, Ministre de l'Economie, des Finances et de l'Industrie, Ministre de l'Ecologie et du Développement durable.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

Last Updated: March 11, 2008 12:06 EDT