OPINION OF ADVOCATE GENERAL SIR GORDON SLYNN

DELIVERED ON 1 JUNE 1983

My Lords,

The Société Coopérative d'Amélioration de l'Élevage et d'Insémination Artificielle du Béarn conducts an artificial insemination centre approved by the French Minister for Agriculture with an exclusive right to operate in the zone allotted to it. Mr Mialocq and Mr Saphore are apparently qualified artificial inseminators. They are charged by the Société Coopérative with the criminal offence of carrying out artificial insemination in an area not allotted to them for that purpose, namely the area allotted to the Société Coopérative. A claim is also made that they and their employers, the Société Agri-Sem are jointly and severally liable to pay to the Société Coopérative FF 50000 by way of damages.

By Articles 4 and 5 of Law No 66-1005 of 28 December 1966, the object of which was said to be, inter alia, the improvement of the quality of bovine cattle, the operations of collecting and inserting the semen could only be carried out by or under the control of those holding a licence as head of an insemination centre. Such a centre might carry out both or only one of the two operations. A licence is granted by the Minister for Agriculture having- regard, amongst other factors, to the facilities already existing. Each licence defines a limited zone within which the centre has a monopoly to administer the semen, but the breeder can require such a centre to obtain the semen from other production centres satisfying the regulations, the cost of doing so being for the breeder's account. In cases where a cooperative obtains a licence it is obliged to supply other breeders in the area who do not belong to the cooperative.

Further details of the system of control were given in Decree No 69-258 of 22 March 1969 and in an order of the Minister for Agriculture of 17 April 1969. By Article 1 of the latter, in the absence of a reciprocal arrangement with certain other countries, the licence holder had to be a French national or a legal persona having a majority of French members. By Article 10 it is provided that the activities of production centres normally correspond with the zones of the insemination centres with which they have contracts; by Article 12 that insemination centres must enter into contracts with one or more production centres which guarantee regular and sufficient quantities of semen; by Article 13 that although insemination centres will normally take their supplies from production centres with which they have contracts, they may, on the written demand of a breeder, obtain the semen from “other centres”. Semen held by an insemination centre is normally to be used only in the zone defined in the licence and, if not used, can only be returned to the production centre from which it was obtained. In addition, by the order, the Minister had power to limit or bar the temporary taking of the semen from a particular animal and the production centres could delegate certain tasks to inseminating centres with which they were contractually bound.

By an order of 12 November 1969, the earlier requirement that a licence-holder be a French national was extended to include the nationals of other Member States.

Special provisions exist with regard to the importation of semen from other countries, in particular in an order of22 October 1949 (JORF of 20 October 1949, p. 10800) and a Decree No 70-137 of 16 February 1970 (JORF of 19 February 1970, p. 1766) and various notices issued to importers. In substance the effect of these is that each importation of semen requires a separate licence from the Ministry of Agriculture. To obtain a licence the applicant must supply various documents showing not only the number of doses to be imported but a certificate from a laboratory approved in the country of origin. Licences are only to be issued for approved breeds or cattle and for animals which satisfy the standards laid down by the French Minister for Agriculture.

In the course of the criminal proceedings (in which the defendants did not appear and were not represented) the Tribunal Correctionnel de Grande Instance found that the Société Cooperative's centre is concerned only with insemination and not in the collection of semen. The national court took the view that the centres which were given an exclusive concession for a specific area were monopolistic in nature, and that the grant of such a concession might violate Article 37 of the Treaty. “They owe their existence to a measure adopted by the State and their exclusive nature is guaranteed by law”. The State directly controls production centres in so far as quality, quantity and price are concerned, and has an indirect control over insemination centres, neither centre in effect being subject to competition. The Court found that a national monopoly may influence the national economy and trade in semen between Member States. Although the Court accepted that foreign breeders might have an insemination centre or a semen production centre, they were required to obtain a licence, and the approval of the Ministry of Agriculture. Accordingly “the question arises whether those measures, inasmuch as they do not contain any particular guarantee ensuring equality, are discriminatory since their discriminatory character does not seem to be absolute”, and whether “a system of authorizations left to the discretion of a monopoly involves a discrimination within the meaning of Article 37”.

The national court referred the following questions to the Court of Justice :

1. 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?

2. If that question is answered in the affirmative, can a system under which authorizations are issued by the State for the provisions of such services involve discrimination within the meaning of the same article?

3. More particularly still, can the discrimination referred to apply exclusively to persons and not to products?

The Société Coopérative takes as a preliminary point that these were not truly adversary proceedings since the defendants did not appear. If they had appeared, the reference would not have been made. It seems to me that the national court was satisfied that a question of interpretation arose which it felt necessary to decide to enable it to give judgment. The fact that the defendants did not appear does not deprive it of that power. It seems in any event highly unlikely that the defendants would before the national court have accepted that no question of Community law arose. Their case is the reverse.

The facts and arguments in the pleadings suggest that a number of restrictions may exist which raise questions of validity under Community law and in particular under Articles 30, 52 to 59 and 85 and 86 of the EEC Treaty — the rules of the Union Nationale des Coopératives d'Élevage et d'Insémination Artificielle, the system of licensing imports and the difficulties alleged to be encountered by those seeking to import semen from abroad, the inability of the insemination centres to hold stocks of semen other than those obtained pursuant to ongoing contracts notified to the Ministiy, the restrictions on breeders to obtain semen themselves, the limitation of cattle breeds, the difficulty of a person established in another Member State in obtaining a licence for an insemination centre when the whole territory has already been allotted in areas of monopoly. It does not seem to me, however, that these fall for investigation under the questions presently referred, and there are in any event insufficient findings of fact by the referring court to enable the Court of Jutice to deal with them. That is not a criticism of the referring court; it is simply that they were not felt to arise. It seems to me to be right, accordingly, to limit this opinion to the questions actually posed which, in my opinion, can be dealt with shortly.

This prosecution is concerned only with the act of inseminating and the centre bringing the proceedings only carries out insemination. Restrictions on the supply of semen do not, in my opinion, direcdy arise in this case.

The national court's view that there was a State monopoly within the meaning of Article 37 seems to have been based largely on a reading of the legislation which imposes the restrictions to which I have referred. On a proper reading of that legislation it does not seem to me that a State monopoly is created as a matter of law in respect of the supply of semen. Nor does it seem to me on the facts found to have been established as a fact. There is, it is accepted, a monopoly for the administration of semen in each particular area. Whether that amounts to a State monopoly it is perhaps not necessary to decide in this case. However, even accepting that a State monopoly may be limited to part of the territory of a Member State and that a number of individual monopolies may be so closely linked, and be influenced or controlled by the State, that they can be regarded as in reality a State monopoly, it does not seem to me to have been shown in this case that such a State monopoly exists as a fact.

One thing seems clear: Article 37 is not concerned with the provision of services but with the supply of goods (Case 155/73 Sacchi [1974] ECR 409). There may be cases where goods are supplied and services rendered, in one transaction, where the service is so minimal that it should be treated as part of the process of supplying goods rather than as a separate activity. Despite the arguments advanced, that does not seem to me to be the case here. The obtaining for the breeder's account of semen, or the sale to the breeder of semen bought by the centre under its own ongoing contracts, is, in my view, to be treated as a different activity from the service of inserting the semen by a qualified inseminator.

It seems to be suggested that this is an “agricultural” rather than a “commercial” transaction so that Article 37 does not in any event apply. This does not seem to me to be a valid distinction. What matters here is that the question raised, like the act charged as being a criminal offence, is simply the act of inseminating, a service. The defendants are not as I understnd it, charged with obtaining semen contrary to the French rules and no question arises in this case as to their breach of any restriction on the importation of semen from other Member States which would raise different questions as to the validity of such restrictions (if they exist) on the free movement of goods in the Community.

On this basis there is no infringement of Article 37, and the second and third questions do not arise.

If in fact there is discrimination between nationals of Member States arising from the terms and conditions upon which authorization to carry out the service of inseminating is granted, that may require investigation under Articles 52 to 59 of the Treaty. Even if there is a State monopoly for the provision of such services, it cannot fall under Article 37. A restriction on persons may, it seems to me, be capable of falling within both Article 37, where the supply of goods is concerned, and under Articles 52 to 59 of the Treaty where the provision of services is involved.

I would accordingly answer the questions referred on the basis that “Article 37 does not relate to a monopoly in the provision of services and no question of discrimination in the supply of such services arises under that Article”.