CJEC, June 28, 1983, No 271-81

The court

1 By jugdment of 22 april 1981, which was received at the court on 7 october 1981, the tribunal de grande instance, pau, referred to the court of justice for a preliminary ruling under article 177 of the eec treaty three questions on the interpretation of article 37 of the eec treaty.

2 Those questions were raised in a dispute concerning the infringement of french legislation on the artificial insemination of cattle by two breeders who carried out artificial insemination within an area in which the societe cooperative d'amelioration de l'elevage et d'insemination artificielle du bearn had an exclusive concession to carry out such operations.

3 According to the information provided by the french government and by the commission, the artificial insemination of cattle in france is governed, in particular, by law no 66-1005 of 28 december 1966 on animal rearing (journal officiel de la republique francaise of 29 december 1966, p. 11619). The first paragraph of article 5 of that law provides that insemination centres may operate only subject to prior authorization. That provision distinguishes between centres which are responsible for the production of semen and centres which carry out insemination, but it does not preclude a centre of either kind from carrying on both of those activities at the same time. Production involves the stocking and testing of male breeding animals and the extraction, packaging, preservation and sale of their semen. Insemination involves the insemination of female animals or the supervision of insemination where it is carried out by duly authorized breeders.

4 The above-mentioned law of 1966 also provides that each insemination centre is to have an exclusive concession in respect of a specific area (fourth paragraph of article 5); where such an area is assigned to an agricultural cooperative, the latter must extend its facilities to non-members. Breeders within an area assigned to an insemination centre may request it to provide them with semen from production centres of their own choice (fifth paragraph of article 5); the breeder is to bear any additional costs resulting from such a choice. Insemination centres which are not at the same time production centres normally procure breeding animals or semen from the production centre or centres with which they have concluded a contract for the supply of animals or semen.

5 The judgment making the reference finds, on the basis of that legislation, that there is at present a territorial monopoly in france in favour of centres for the insemination of cattle. According to that judgment, the grant to a cooperative of an exclusive concession in respect of a specific area may be contrary to the provisions of article 37 of the eec treaty relating to state monopolies of a commercial character.

6 In that regard, the national court considers it to be undeniable that the insemination centres in question are in the nature of monopolies which have a national character inasmuch as the centres as a whole are not exposed to competition since breeders are compelled to deal with the centre for their area in order to have their cattle artificially inseminated and even in order to obtain the semen of their choice. The national court, however, wishes to ascertain whether those centres are of a commercial character.

7 In order to seek guidance on that point, the national court requested the court of justice to give a preliminary ruling on three questions, the first of which is as follows:

''Does the provision of services have a commercial character within the meaning of article 37 of the treaty of rome if, because it is the subject of a national monopoly, the state is enabled to direct a branch of the national economy?

' '

8 In the first place, it must be remembered that, as the court has already held in its judgment of 30 april 1974 in case 155-73 (sacchi (1974) ecr 409), it follows both from the place occupied by article 37 in the chapter of the eec treaty on the elimination of quantitative restrictions and from the wording used in that provision that it refers to trade in goods and cannot relate to a monopoly over the provision of services.

9 Accordingly, the mere fact that a state monopoly over the provision of services enables the authorities of the member state concerned to direct, in the terms used in the question, a branch of the national economy is not sufficient to support the conclusion that such a monopoly comes within the provisions of article 37.

10 However, the possibility cannot be ruled out that a monopoly over the provision of services may have an indirect influence on trade in goods between member states. Thus an undertaking or group of undertakings which exercises a monopoly over the provision of certain services may contravene the principle of the free movement of goods, if, for example, such a monopoly leads to discrimination against imported products as opposed to products of domestic origin.

11 The circumstances referred to in the judgment making the reference and those which have come to light in the course of the proceedings before the court are not, however, sufficient to support the view that legislation of the kind which in france governs the artificial insemination of cattle indirectly establishes a monopoly hindering the free movement of goods.

12 In fact, it is clear from those circumstances that, under the legislation applicable in france, any individual breeder is free to request the insemination centre for his area to supply him with semen from a production centre of his choice, whether situated in france or abroad. The french government has stated that there is nothing in its legislation to prevent an insemination centre or even an individual breeder either from approaching a foreign centre directly with a view to purchasing semen from it or from obtaining the necessary import licence.

13 The answer to the first question must therefore be that article 37, properly construed, does not apply to a monopoly over the provision of services, even if such a monopoly enables the member states concerned to direct a branch of the national economy, provided that it does not contravene the principle of the free movement of goods by discriminating against imported products to the advantage of products of domestic origin.

14 In the light of that answer, the second and third questions, which concern only the effects of a monopoly over the provision of services, are devoid of purpose.

Costs

15 The costs incurred by the french government and by the commission of the european communities, which have submitted observations to the court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,

The court,

In answer to the questions referred to it by the tribunal de grande instance, pau, by judgment of 22 april 1981, hereby rules:

Article 37 of the eec treaty does not apply to a monopoly over the provision of services, even if such a monopoly enables the member state concerned to direct a branch of the national economy, provided that it does not contravene the principle of the free movement of goods by discriminating against imported products to the advantage of products of domestic origin.