C-161/82

JUDGMENT OF THE COURT 28 J U N E 1983

Commission of the European Communities v French Republic

(National monopolies : Artificial insemination of cattle)

Case 161/82

Agriculture — Harmonization of laws — Directive No 77/504 — Semen intended/or the artificial insemination o/ cattle — In tra-Community trade — Powers o/Mem bet- States — Grants o/import licences subject to observance o/zooteebnical rules applicable to semen o/national origin — Permissibility (Council Directive No 77/504, Arts. 2 and 3)

A Member State does not infringe produced in the national territory. It Directive N o 77/504 on pure bred follows from Article 3 of the directive in animals of the bovine species by sub- question that the directive accepts the jecting the grant of import licences for diversity of the existing rules and in the semen intended for the artificial event of intra-Community trade allows insemination of cattle to the zootechni- the rules applicable to the use of semen cal requirements provided for by its in the State in which the semen is to be legislation and applicable without dis- used to prevail. tinction to imported semen and that

APPLICATION for a declaration that the French Republic, by restricting access to imports of semen intended for the artificial insemination of animals to a specific category of producers and by enabling insemination centres to carry on discriminatory practices in relation to imported semen, has failed to fulfil its obligations under Article 37 of the EEC Treaty and Article 2 of Council Directive No 77/504 of 25 July 1977 on pure-bred animals of the bovine species,

THE COURT

composed of: J. Mertens de Wilmars, President, A. O'Keeffe and U. Everling (Presidents of Chambers), Lord Mackenzie Stuart, G. Bosco, T. Koopmans, O. Due, K. Bahlmann and Y. Galmot, Judges,

Advocate General: Sir Gordon Slynn Registrar: P. Heim

gives the following

COMMISSION v FRANCE

Artificial insemination may be carried "Insemination centres may be authorized out only by holders of a licence as head to cany out one or both of the following of an insemination centre or as two categories of activities: inseminator . . ." (1) Production, consisting of main- taining a station for approved male Article 5 of the same Law provides that breeding animals or animals the gen- the management of insemination centres, etic testing of which is authorized, whether concerned with the collection of taking responsibility for genetic semen and artificial insemination or only testing pursuant to a programme one of the two, is subject to prior auth- approved by the Minister for Agri- orization from the Minister for Agri- culture and the collection, packing, culture. preservation and supply of the semen

JUDGMENT OF 28. 6. 1983 — CASE 161/82

"Every insemination centre shall sign An insemination centre shall not return contracts with one or more production semen except to the production centres centres. supplying it . . ."

Such contracts must guarantee the regu- Under Articles 17 and 18 of the same larity of supplies of semen for the area order copies of contracts for supply and

COMMISSION v FRANCK

testing must be included with the request "The Member States shall ensure that for authorization made by a production the following shall not be prohibited, centre and that made by an insemination restricted or impeded on zootechnical centre. grounds:

JUDGMENT OF 28. 6. 1983 — CASE 161/82

for in the first paragraph of Article 169 duction centres other than those with of the Treaty in relation to the failure of which they have signed a contract. a State to fulfil its obligations.

That power has been enlarged at the After referring to the aspects of the request of breeders to enable them to French rules described above the have available semen imported after Commission, in that letter, alleges that delivery of an import licence. Until now the licence to import is granted only to such licences have been granted to any production centres through the possible importer capable of using the semen in intermediary of a body acting on behalf compliance with the rules or acting on of the centres. In practice that body, behalf of a body fulfilling that condition. the Union Nationale des Coopératives The issue of a licence is automatic and d'Elevage et d'Insémination Artificielle without any limit on quantity when the [National Union of Stockbreeding and zootechnical rules laid down for the Artificial Insemination Co-operatives] semen of the breed in question are (hereinafter referred to as "the National observed. The monopoly afforded to Union") effects almost all imports. A insemination centres authorized to breeder requiring foreign semen applies perform artificial insemination relates to a production centre which effects the solely to the service of artificial in- import through the intermediary of the semination. Trade in semen properly so National Union. called is not the subject of any monopoly whether on behalf of the insemination centres or the National Union.

COMMISSION v FRANCE

Government claims that a number of product from other Member States are transactions have been negotiated not more restrictive than those applicable through other channels. Thus of the 51 to semen and embryos produced in import licences issued in respect of France. 89 605 doses of semen in 1978, 9 were granted to the company Bovec in respect of 8 229 doses and 3 to co-operatives in In its memorandum in reply the French respect of 1 567 doses; of the 72 licences Government moreover states that it is issued in respect of 85 686 doses in 1979, ready: 17 were granted to Bovec in respect of 17 067 doses and 1 to a co-operative in respect of 2 000 doses. It follows that the To allow breeders holding a "special French rules in no way prevent the issue licence" as inseminator to import semen of import licences for semen direct to directly to cover their own breeding insemination centres even if in prac- needs and to make provisions allowing tice artificial insemination co-operatives breeders not coming within the aforesaid make little use of the opportunity. category, and who are not therefore entitled to hold semen, to import semen for the needs of their breeding if they designate in their application the centre Moreover the procedure for the issue of approved for artificial insemination with import licences is intended to check that which they are connected. the zootechnical references produced in respect of the semen the import of which is contemplated comply with the re- However, those provisions become ap- quirements laid down for their use in plicable only on condition of: artificial insemination.

"(a) Can the Commission substantiate Those aspects of the French rules are the statements in its application to therefore not the subject of the reasoned the effect that imports of semen are opinion. artificially burdened with high charges, subject to long delays in delivery and are responsible for difficulties in entering animals Moreover the Commission maintains its produced from imported semen in view that the limitation of importers to a herd-books? specific category of producers and the opportunity for the insemination centres to practise discrimination as a result of (b) The Commission is asked to clarify the French rules are incompatible with its interpretation of Article 37 of Article 37 of the Treaty and Article 2 of the Treaty in relation to the Council Directive No 77/504. problems raised by this case and then to explain which, in its view, is the body by which France controls, directs or appreciably influences It considers that the adjustments pro- imports of semen intended for the posed by the French Government are not artificial insemination of cattle and likely to terminate the infringement and which, in its view, are the cate- moreover it is unacceptable that they gories of producers to whom access should be subject to the condition that to imports of semen is restricted. there should be reciprocity in the other Member States. (c) The Commission is asked to supply statistics in relation to intra-Com- In a memorandum to the Commission munity trade in bovine semen." dated 19 April 1982 the French Govern- ment confirmed its position. Further, the Court invited the French Government to answer the following questions in writing : (d) The proceedings before the Court

As regards the facts it admits that import The Commission, the applicant, claims licences are also granted to certain that the Court should: production or insemination centres which are not associated with the National Union or Bovec. It nevertheless (1) Declare that the French Republic, by maintains that the National Union restricting access to imports of semen effects the major part of imports since intended for the artificial insemi- that association contains almost all the nation of animals to a specific insemination centres whilst any breeder category of producers and by requiring foreign semen must apply to enabling insemination centres to the insemination centre of his area. Thus carry on discriminatory practices in import licences are in particular refused relation to imported semen, has to producers outside the control of failed to fulfil its obligations under centres officially approved. Article 37 (1) of the EEC Treaty and Article 2 of Council Directive No 77/504 of 25 July 1977; After giving that clarification the Com- (2) Order the defendant to pay the mission basically reasserts the arguments costs. put forward in the administrative proceedings.

The French Republic, the defendant, contends that the Court should: It refers to the judgment of 3 February Dismiss the Commission's application as 1976 in Case 59/75 Manghera [1976] unfounded; ECR 91 to claim that the exclusive right to import and market imported products which is exercised or conferred by the Order the applicant to pay the costs. State constitutes discrimination contrary to Article 37. The practice of reserving the importation and marketing of imported semen to bodies producing and III — Submissions and argu- marketing their own semen constitutes a m e n t s of the p a r t i e s fortiori such discrimination. Such a practice means a guarantee of the sale of national production, the effect of which The Commission of the European Com- is equivalent to a quantitative restriction munities, the applicant, states first of all on imports prohibited by Article 30.

(b) Insemination centres should be In that respect the French Government expressly authorized to obtain stocks alleges that the Law of 28 December from suppliers in other Member 1966 and the implementing legislation States if they can show, where pursue a recognized objective of public appropriate, permanent relations interest which is worthy of protection, with the latter. namely the improvement of the quality and the conditions of stock farming. The State thus assumes a task of public (c) All opportunity for production and interest by organizing a rigorous insemination centres to discriminate supervision of artificial insemination. against imported products as against Such supervision does not however allow domestic products should be ex- it to direct, control or influence imports cluded by law so as to eliminate the or exports directly or indirectly. higher costs and unjustifiably longer delivery dates and the difficulties involved in entering in herd-books The system established to that end is animals produced from semen aimed inter alia at sanitary conditions for imported from other Member States. the conduct of artificial insemination, the training of inseminators and the quality of cattle allowed to reproduce. For that purpose a territorial monopoly in services As regards Directive N o 77/504 the in favour of approved insemination Commission observes that national centres has been established. The con- legislation on the use of semen and tractual links between insemination embryos provided for in Article 3 may centres and production centres is apply only subject to the prohibition of intended from the same point of view to restrictions on zootechnical grounds as ensure the regularity of supplies of referred to in Article 2. The fifth indent semen. Finally the system of import of Article 2 refers to Article 3 only in licences is intended to make it possible to respect of intra-Community trade in check that imported semen complies with bulls used for artificial insemination. the French health and zootechnical rules.

As to the alleged discrimination against imported semen, the French Government states that the condition to the effect that the importer must be able to use the In addition the Commission has not semen in accordance with the law means substantiated its allegations of dis- only that the importer must specify the criminatory practices by the insemination centre or approved inseminator who will centres. effect the insemination. The proposal made during the administrative pro- ceedings to extend the issue of licences to any breeder only gives specific With regard to Directive No 77/504 the expression to the intention of the French French Government states that checking Government to apply the legislation that imported products comply with already in force. Moreover, that facility the French zootechnical rules is the is little used because of the prohibitive counterpart of the supervision of the cost of importing small quantities and same kind undertaken with regard to the lack of interest in importing semen French products and a necessary when there is no authorization to complement for achieving the aim of inseminate. improving the quality of stock. The meaning of Articles 2 and 3 of the directive is that a Member State must not apply stricter rules to imported semen. The French Government reiterates its The interpretation put forward by the explanation of the position of the Commission is tantamount to preventing National Union and supplements the a Member State from applying its statistics of imports given during the zootechnical legislation to semen administrative proceedings as follows: of imported from other Member States. 67 licences issued in respect of 101 392 doses of semen in 1980 20 were granted to Bovec in respect of 25 399 doses, 42 to the National Union itself and a branch in respect of 72 293 doses and In its reply the Commission maintains 5 to insemination centres in respect of that the restriction of imports of semen 3 700 doses; of 50 licences issued in resulting from the rules and admini- respect of 91 895 doses in 1981, 18 were strative practice in France amounts to a granted to Bovec in respect of 18 667 factual monopoly within the ambit of doses of semen, 30 to the National Article 37 of the Treaty. Union itself and a branch in respect of 60 888 doses and 2 to a centre and another association in respect of 2 340 doses. Another table submitted to the It alleges that the adjustment proposed Court shows the distribution of imports by the French Government, which would between the Member States and certain be superfluous if it reflected the existing non-member countries which export position, merely confirms the need to bovine semen. amend the existing rules and practice.

The extension proposed, which relates Moreover it states that the quality and only to access to imports, is moreover reliability of semen can be guaranteed not sufficient to make the French only by close collaboration between the legislation comply with Community law. production and insemination centres. An insemination centre holding stock from production centres with which it is associated has no interest in obtaining semen elsewhere on its own initiative As to the opportunity for breeders to without a specific request from an have insemination effected with the interested breeder. Article 5 of the Law semen of their choice, the Commission of 28 December 1966 and Article 13 of states that the supply is in general a the Ministerial order of 17 April 1969 closed circuit between insemination merely reflect that factual situation while centres and production centres on the leaving to breeders the choice of perhaps basis of contracts imposed by the requesting insemination with semen from legislature to that end. The insemination abroad. centres are not free to obtain supplies on their own initiative from other production centres or from abroad. Taken together with the administrative practice in relation to import licences the result of this system is practically to exclude competition on the French As regards the proposed adjustments the market in semen and to exclude equality French Government recognizes that the of opportunity for imported semen from drafting of its note in answer to the other Member States on the French formal notice from the Commission may market as against domestic products. appear inaccurate on that issue in so far as it suggests that formal amendments to the existing provisions are necessary. It does not follow from the existing rules that access to imports is restricted to a Finally, assuming that the reservation in specific category of producers. Nor has Article 3 of Directive N o 77/504 in investigation by the defendant of its relation to national legislation is also administrative practice established any applicable to semen it relates only to discrimination. In that connection the national measures applicable without French 'Government observes that the distinction to domestic and imported complaints received by the Commission, products, such as measures in relation to which were listed in Case 271/81, are the conditions appertaining to the quality directed against the territorial monopoly of semen. Discriminatory measures affecting the provision of services, relating to the import and marketing of lawfully held by insemination centres. imported semen come only under Article 2 of the directive.

Decision

1 By application lodged at the Court Registry on 27 May 1982 the Commission of the European Communities brought an action under Article 169 of the EEC Treaty for a declaration that the French Republic, by restricting imports of semen intended for the artificial insemination of animals to a specific categoiy of producers and by enabling insemination centres to carry out discriminatory practices in relation to imported semen, has failed to fulfil its obligations under the Treaty.

2 In the Commission's view the provisions applicable in France laid down by laws or regulations in relation to the artificial insemination of animals and the practice followed by the French authorities as regards conditions for the importation of semen are contrary to Article 37 of the Treaty and Article 2 of Council Directive No 77/504 of 25 July 1977 on pure-bred breeding animals of the bovine species (Official Journal L 206, p. 8).

JUDGMENT OF 28. 6. 1983 — CASE 161/82

3 The issue between the parties, both during the proceedings prior to the action brought before the Court and in this action has related solely to the French system applicable to the artificial insemination of cattle. The directive cited by the Commission relates only to pure-bred breeding animals of the bovine species and the facts on which the Commission bases its action have arisen on the import of bovine semen. In those circumstances the Court considers that the action is concerned with import restrictions and dis- criminatory practices with regard to semen intended for the artificial insemination of animals of the bovine species only.

COMMISSION v FRANCE

6 The import of semen requires the grant on each occasion of a licence from the Minister for Agriculture. Application for a licence must be accompanied by a pro forma invoice mentioning the quantities of doses per breeding animal, a certificate of the blood group of the animals which have produced the semen, given by an approved laboratory in the countiy of origin, and the official results of checks on the performance of the animals.

7 In this action the Commission does not challenge either the right of the French authorities to require import licences for the importation of semen intended for the artificial insemination of cattle or to require that imported semen shall observe the zootechnical rules applicable in France. Its action is concerned solely with the fact that the French rules and the administrative practice followed by the French authorities in relation to the grant of import licences leads to the restriction of access to imports of semen to a particular category of producers and to the opportunity for insemination centres to carry on discriminatory practices.

s In that respect the Commission alleges that import licences are granted exclusively to traders who, according to the French authorities, are capable of using the semen in accordance with the national rules applicable or who act on behalf of a body statisfying that condition. It follows that, generally speaking, import licences are issued only to production or insemination centres and to the national union of such centres, the Union Nationale de Coopération d'Elevage et d'Insémination Artificielle [National Union of Stock-breeding and Artificial Insemination Co-operatives] (hereinafter referred to as "the National Union") and one commercial company, Bovec.

1 3 The French Government emphasizes that the Law of 1966 on stock-breeding and the implementing legislation is intended to improve the quality of and conditions for stock farming. That objective involves a rigorous supervision of artificial insemination, which in turn has a certain repercussion on the conditions for the grant of import licences for semen intended for artificial insemination.

i4 It must be observed first of all that there is nothing in the documents in the file or in the arguments addressed to the Court to show that the French laws or regulations establish a national monopoly in the marketing or importation of semen intended for the artificial insemination of cattle. For the Commission to be able to rely on Article 37 of the Treaty it would therefore be necessary pursuant to the second subparagraph of Article 37 (1) for the Commission to establish the existence of a body through which the French State, in law or in fact, controls, directs or appreciably influences imports of semen from other Member States either directly or indirectly.

COMMISSION v FRANCE

is The Commission admits that the sole fact that the French Republic subjects the import of semen to a licensing system is not such as to establish the existence of a situation in fact or in law such as described in that provision. It has nevertheless maintained that the practice followed by the French auth- orities leads to that result.

i6 It is apparent from the statistics submitted by the French Government and not challenged by the Commission that in 1980 and 1981 more than half the foreign bovine semen purchased in France was imported by the National Union and the rest by insemination centres, by a branch of the National Union and by Bovec. In 1981 more than 7 5 % of imported semen came from non-member countries and in particular from the United States. In the same year almost 20% of doses of imported semen were covered by import licences granted to Bovec; in 1980 the figure actually reached 20%.

2i The French Government has cited Article 3 of the directive to refute that submission, According to that provision, until the entry into force of Community provisions for the approval of pure-bred breeding animals of the bovine species for breeding, the approval of bulls to be used for artificial insemination as well as the use of semen and embryos are to remain subject to national law, on the understanding that that law may not be more restrictive than that applicable to pure-bred breeding animals of the bovine species, semen and embryos in the Member State of destination.

22 It must be observed that the Commission's submission, placed in the context of the aforesaid provisions of Articles 2 and 3 of the directive, amount to arguing that the restrictions or impediments to intra-Community trade in semen for zootechnical reasons, as prohibited by Article 2, imply the application by a Member State to imported semen of the zootechnical rules provided by its national law for the use of semen within its territory.

23 That view is not compatible with the provisions of Article 3, namely that the use of semen is to remain subject to national law and conflicts in particular with the provision at the end of that article to the effect that a Member State may not apply to semen imported from another Member State a stricter system than that applicable to sperm produced and used in its own territory. It follows that the directive accepts the diversity of the existing rules and in the event of intra-Community trade allows the rules applicable to the use of semen in the State in which the semen is to be used to prevail.

THE COURT

hereby:

1. Dismisses the application;

2. Orders the applicant to pay the costs.

Mertens de Wilmars O'Keeffe Everling Mackenzie Stuart Bosco Koopmans Due Bahlmann Galmot

Delivered in open court in Luxembourg on 28 June 1983.