Commission of the European Communities v French Republic (161/82)

III —Submissions and arguments of the parties

The Commission of the European Communities, the applicant, states first of all that this action, just like the reasoned opinion, is aimed only at certain aspects of the French rules on artificial insemination and administrative practice with regard to import licences. They are in particular the restriction of access to imports of semen to a particular category of producers and the opportunity for insemination centres to carry on restrictive practices.As regards the facts it admits that import licences are also granted to certain production or insemination centres which are not associated with the National Union or Bovec. It nevertheless maintains that the National Union effects the major part of imports since that association contains almost all the insemination centres whilst any breeder requiring foreign semen must apply to the insemination centre of his area. Thus import licences are in particular refused to producers outside the control of centres officially approved.After giving that clarification the Commission basically reasserts the arguments put forward in the administrative proceedings.It refers to the judgment of 3 February 1976 in Case 59/75 Manghera [1976] ECR 91 to claim that the exclusive right to import and market imported products which is exercised or conferred by the State constitutes discrimination contrary to Article 37. The practice of reserving the importation and marketing of imported semen to bodies producing and marketing their own semen constitutes a fortiori such discrimination. Such a practice means a guarantee of the sale of national production, the effect of which is equivalent to a quantitative restriction on imports prohibited by Article 30.The Commission summarizes its position as follows. To make the French rules compatible with Community law three amendments are necessary:(a) Anyone wishing to do so should be able to import semen; possibly there might be a condition that the semen should be sent directly to an approved insemination centre or person entitled to hold semen.(b) Insemination centres should be expressly authorized to obtain stocks from suppliers in other Member States if they can show, where appropriate, permanent relations with the latter.(c) All opportunity for production and insemination centres to discriminate against imported products as against domestic products should be excluded by law so as to eliminate the higher costs and unjustifiably longer delivery dates and the difficulties involved in entering in herd-books animals produced from semen imported from other Member States.As regards Directive No 77/504 the Commission observes that national legislation on the use of semen and embryos provided for in Article 3 may apply only subject to the prohibition of restrictions on zootechnical grounds as referred to in Article 2. The fifth indent of Article 2 refers to Article 3 only in respect of intra-Community trade in bulls used for artificial insemination.The Government of the French Republic, the defendant, states first of all that the condition of reciprocity in respect of theadjustment measures proposed in the administrative proceedings is based on an error and is not part in fact of the proposals for adjustment.Moreover, it considers that the commercial monopoly presumed by the Commission does not exist, so that Article 37 of the Treaty does not apply to the French arrangements for artificial insemination.In that respect the French Government alleges that the Law of 28 December 1966 and the implementing legislation pursue a recognized objective of public interest which is worthy of protection, namely the improvement of the quality and the conditions of stock farming. The State thus assumes a task of public interest by organizing a rigorous supervision of artificial insemination. Such supervision does not however allow it to direct, control or influence imports or exports directly or indirectly.The system established to that end is aimed inter alia at sanitary conditions for 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 in favour of approved insemination centres has been established. The contractual links between insemination centres and production centres is intended from the same point of view to ensure the regularity of supplies of semen. Finally the system of import licences is intended to make it possible to check that imported semen complies with the French health and zootechnical rules.There is therefore no provision laying down a commercial monopoly in semen. The territorial exclusiveness afforded to artificial insemination centres applies only to the rendering of services. Moreover, the centres are totally independent of the State.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 semen in accordance with the law means only that the importer must specify the centre or approved inseminator who will effect the insemination. The proposal made during the administrative proceedings to extend the issue of licences to any breeder only gives specific expression to the intention of the French Government to apply the legislation already in force. Moreover, that facility is little used because of the prohibitive cost of importing small quantities and the lack of interest in importing semen when there is no authorization to inseminate.The French Government reiterates its explanation of the position of the National Union and supplements the statistics of imports given during the administrative proceedings as follows: of 67 licences issued in respect of 101392 doses of semen in 1980 20 were granted to Bovec in respect of 25399 doses, 42 to the National Union itself and a branch in respect of 72293 doses and 5 to insemination centres in respect of 3700 doses; of 50 licences issued in respect of 91895 doses in 1981, 18 were granted to Bovec in respect of 18667 doses of semen, 30 to the National Union itself and a branch in respect of 60888 doses and 2 to a centre and another association in respect of 2340 doses. Another table submitted to the Court shows the distribution of imports between the Member States and certain nonmember countries which export bovine semen.In the light of the foregoing the French Government complains that the Commission did not consider whether the fact that in practice imports are confined to certain categories of producers is not due simply to the free choice of those traders.In addition the Commission has not substantiated its allegations of discriminatory practices by the insemination centres.With regard to Directive No 77/504 the French Government states that checking that imported products comply with the French zootechnical rules is the counterpart of the supervision of the same kind undertaken with regard to French products and a necessary complement for achieving the aim of 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 interpretation put forward by the Commission is tantamount to preventing a Member State from applying its zootechnical legislation to semen imported from other Member States.In its reply the Commission maintains that the restriction of imports of semen resulting from the rules and administrative practice in France amounts to a factual monopoly within the ambit of Article 37 of the Treaty.It alleges that the adjustment proposed by the French Government, which would be superfluous if it reflected the existing position, merely confirms the need to amend the existing rules and practice.The extension proposed, which relates only to access to imports, is moreover not sufficient to make the French legislation comply with Community law.As to the opportunity for breeders to have insemination effected with the semen of their choice, the Commission states that the supply is in general a closed circuit between insemination centres and production centres on the basis of contracts imposed by the legislature to that end. The insemination 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 market in semen and to exclude equality of opportunity for imported semen from other Member States on the French market as against domestic products.Finally, assuming that the reservation in Article 3 of Directive No 77/504 in relation to national legislation is also applicable to semen it relates only to national measures applicable without distinction to domestic and imported products, such as measures in relation to the conditions appertaining to the quality of semen. Discriminatory measures relating to the import and marketing of imported semen come only under Article 2 of the directive.In its rejoinder the French Government says that in describing the French system as a factual monopoly the Commission recognizes that France has not created a legal monopoly in that area.Moreover it states that the quality and reliability of semen can be guaranteed only by close collaboration between the 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 without a specific request from an interested breeder. Article 5 of the Law of 28 December 1966 and Article 13 of the Ministerial order of 17 April 1969 merely reflect that factual situation while leaving to breeders the choice of perhaps requesting insemination with semen from abroad.As regards the proposed adjustments the French Government recognizes that the drafting of its note in answer to the formal notice from the Commission may 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 specific category of producers. Nor has investigation by the defendant of its administrative practice established any discrimination. In that connection the French Government observes that the complaints received by the Commission, which were listed in Case 271/81, are directed against the territorial monopoly affecting the provision of services, lawfully held by insemination centres.In any event the French authorities responsible for issuing import licences have no discretion. The licence is automatically issued when the objective conditions in relation to zootechnical and health matters are satisfied and the centre or person empowered to effect the insemination is specified.As regards the interpretation of Articles 2 and 3 of Directive No 77/504 the French Government replies that the national legislation, which remains applicable under Article 3, is intended to specify the quality standards in relation to zootechnical and health matters applicable to products used within the national territory.