OPINION OF ADVOCATE GENERAL

MENGOZZI

delivered on 3 April 2008 1( )

Case C‑389/05

Commission of the European Communities

v

French Republic

(Failure of a Member State to fulfil its obligations – Articles 43 EC and 49 EC – Freedom of establishment and freedom to provide services – National rules conferring on authorised centres the exclusive right to provide the service of artificially inseminating cattle in a certain area and making the issue of an inseminator’s licence subject to the conclusion of an agreement with one of those centres)

I – Introduction

1. By this action, an application under Article 226 EC brought by the Commission of the European Communities against the French Republic, the Court of Justice is once again asked to consider, in the light of Community law, the French legislation on the artificial reproduction of cattle, a major feature of which is the regional monopoly on services accorded to centres authorised to carry out the insemination of female bovine animals. ( )

2. The Court has already had occasion to consider that legislation in the light of Article 37 of the EC Treaty (now, after amendment, Article 31 EC) regarding national commercial monopolies, ( ) in the light of Article 86 in conjunction with Article 90(1) of the EC Treaty (now Articles 82 and 86(1) EC) regarding the abuse of a dominant position by undertakings with exclusive rights, ( ) as well as in the light of Directives 77/504/EEC ( ) and 87/328/EEC ( ) on pure-bred breeding animals of the bovine species, ( ) and is now being asked to do so in the light of Articles 43 EC and 49 EC concerning freedom of establishment and the freedom to provide services respectively. ( ) In fact, the Commission asks the Court to declare that, by reserving solely to insemination centres authorised in France exclusively the exercise of activities linked to the artificial reproduction of cattle, the French Republic has failed to fulfil the obligations which are incumbent upon it under Articles 43 EC and 49 EC.

3. In the course of the proceedings, the French Republic amended the legislative system challenged by the Commission, and removed from it the elements forming the subject-matter of the complaints made by the Commission in this action. The French Government states, however, that the purpose of the amendments made to the legislation was not to bring the domestic legal order into line with the obligations deriving from Articles 43 EC and 49 EC, but simply to adjust it to reflect the changed requirements of the sector. The French Government contends that the previous regime was not incompatible with Community law in the ways which the Commission alleges.

4. The purpose of these proceedings is, therefore, to establish a failure to fulfil obligations, denied by the French Republic, and which in any case no longer exists.

II – Relevant provisions of national law

5. Before Law No 2006-11 of 5 January 2006 on agricultural guidance, ( ) Decree No 2006‑1548 of the President of the Republic of 7 December 2006 on health checks in relation to reproductive activities and on the genetic improvement of livestock, ( ) and Decree No 2006-1662 of the President of the Republic of 21 December 2006 on the identification and genetic improvement of animals ( ) – provisions introducing far-reaching reforms to the French legislation on the artificial reproduction of cattle, sheep, pigs and goats – entered into force on 1 January 2007 – and therefore in the course of these proceedings – the artificial reproduction of cattle was governed, in France, by the following provisions:

– Articles L. 653‑1 to L. 653‑10 of the Rural Code, codifying, on the basis of Law No 98-565 of 8 July 1998, ( ) the corresponding provisions already contained in Law No 66-1005 of 28 December 1966 on livestock farming, ( ) and repealed by Law No 98‑565;

– the implementing regulations contained in Articles R.* 653‑102 to R.* 653‑114 of the Rural Code, codifying, on the basis of Prime Ministerial Decree No 2003-851 of 1 September 2003, ( ) the corresponding provisions already contained in Prime Ministerial Decree No 69-258 of 22 March 1969 on artificial reproduction, ( ) repealed by Decree No 2003-851;

– the Decree of the Minister for Agriculture of 17 April 1969 on permits to operate artificial reproduction centres, ( ) as amended by the Decree of the Minister for Agriculture of 12 November 1969 ( ) and the Decree of the Minister for Agriculture and Forests of 24 January 1989; ( )

– the Decree of the Minister for Agriculture and Forests of 21 November 1991 on the training of artificial inseminators and centre managers and the award of the relevant licences, ( ) as amended by the Decree of the Minister for Agriculture, Fisheries and Food of 30 May 1997; ( )

– the Decree of the Minister for Agriculture and Fisheries of 27 December 2000 on the insemination of bovine animals by breeders. ( )

6. On the basis of that legislation, as described by the French Government, the operation of artificial reproduction centres for cattle is subject to ministerial authorisation (Article L. 653‑5 of the Rural Code). A distinction is made between centres responsible for producing the semen and centres which carry out insemination, although both types of activity may be carried out by one and the same centre. Production activities involve the maintenance of a stock of male breeding animals, testing of those breeding animals, and also the collection, processing, conservation and supply of the semen. Insemination activities involve the insemination of females using the semen supplied by the production centres (Article R.* 653‑103 of the Rural Code).

7. Authorisation to open and operate an artificial insemination centre may be accorded to natural or legal persons. For the purposes of the issuing of that authorisation, no distinction is made between French citizens and citizens of other Member States of the Community (Article 1 of the Decree of 17 April 1969, as amended).

8. Each artificial insemination centre (hereinafter: ‘AIC’) serves an area, determined by the measure authorising it, within which it alone is authorised to operate. Breeders located within the area of activity of an AIC may, however, ask the latter to supply semen from production centres of their own choosing (Article L. 653‑7 of the Rural Code).

9. Any economic operator other than an AIC which imports semen from another Member State of the European Community is required to deliver that semen to a production centre or AIC of its own choosing (Article 10 of the Decree of 17 April 1969, as amended). The semen must be conserved in a store placed under the responsibility of a licensed centre manager; in the case of AICs, this may be the ‘main’ store or one of the ‘secondary’ stores distributed throughout the territory assigned to the AIC, and these secondary stores may also be located within an agricultural undertaking (Article 7 of the Decree of 17 April 1969, as amended). For health reasons, however, semen originating in another authorised AIC or another Member State, or directly imported from a third State must pass through the AIC’s main store: the semen is delivered for storage to the AIC, which then forwards it to the secondary store for which it is intended (Article 6 of the Decree of 27 December 2000).

10. Insemination may be carried out only by holders of an AIC manager’s licence or an inseminator’s licence, under the authority of an authorised and territorially competent AIC and subject to the technical responsibility of the AIC manager (Articles L. 653‑4 and R* 653‑102 of the Rural Code, and Article 1 of the Decree of 21 November 1991, as amended). ( ) An inseminator’s licence is issued by the Prefect on submission of a certificate confirming that the person concerned is qualified for the post of inseminator for the species concerned, and a certificate from the director of the authorised and territorially competent AIC confirming that the applicant is subject to his authority when carrying out insemination. For operators who are not AIC employees, in particular self-employed veterinary surgeons, that certificate is issued on conclusion of an agreement between the director of the AIC and the person concerned, which must set out the technical, administrative and financial conditions in which that person will carry out insemination in accordance with the applicable legislation (Article 2 of the Decree of 21 November 1991, as amended).

11. The measures adopted by the French authorities in 2006 substantially changed that legislative framework, as of 1 January 2007. In particular, the system whereby the AICs were accorded exclusive rights over a defined geographical area was abolished and replaced by a system which permits, subject to a declaration by the competent authority, the public artificial insemination of ruminants, in any part of French territory by operators holding an animal health certificate (agrément) functioning as a collection or storage centre for semen, or by inseminators holding a certificate qualifying them to carry out artificial insemination issued by an assessment centre approved by the Minister for Agriculture. ‘For the purposes of contributing to land planning and maintaining genetic diversity’, a universal service for the distribution of semen and insemination has been introduced, and is provided by operators selected on the basis of invitations to tender, and authorised, for fixed periods, to operate within one or more geographical areas. Now that the exclusive rights over a defined geographical area in favour of the authorised AICs have been abolished, the requirement to deliver the semen to and store it at the territorially competent AIC has also ceased to exist.

III – Procedure and forms of order sought

12. On 3 April 2003, prompted by a complaint made by an undertaking operating in the sphere of the artificial reproduction of cattle, the Commission sent the French Republic a letter of formal notice alleging that the latter had infringed Articles 43 EC and 49 EC because of the obstacles to freedom of establishment and to the freedom to provide services caused in that sphere by, on the one hand, the geographical monopoly conferred on authorised AICs to distribute semen and carry out insemination and, on the other, by the restrictive and discretionary conditions for the issuing of inseminators’ licences.

13. By letter of 8 July 2003, the French Government challenged the foundation of those complaints. It stated that there was no discrimination on grounds of nationality in relation to citizens of the Member States when it came to acquiring a permit to open and operate an AIC or an AIC manager’s or inseminator’s licence; that the exclusive rights over a defined geographical area in favour of the AICs did not cover the distribution of the semen, but only insemination; that these exclusive rights were justified by objectives in the public interest – pertaining to health, the improvement and preservation of bovine stock and land-use planning – and took proper account of the principle of proportionality; that the system of inseminator’s licences was also justified by objectives in the public interest – namely, protecting the health and well-being of animals, protecting the health of persons carrying out the insemination and bovine stock and also product traceability – and was consistent with the principle of proportionality.

14. On 19 December 2003, the Commission sent the French Republic a reasoned opinion in which it confirmed, and clarified, the complaints set out in the letter of formal notice, pointing out, more particularly, that the objective of genetically improving and preserving bovine stock could not be relied upon to justify obstacles to freedom of establishment and the freedom to provide services, in view of the complete harmonisation of national legislation designed to pursue that objective, carried out by certain Community directives and, in relation to the other objectives in the public interest invoked by the French Republic, that the national rules at issue went beyond what was necessary to achieve them.

15. By letter of 17 March 2004, the French Republic replied to the reasoned opinion, disputing every one of the complaints.

16. By application lodged at the Registry of the Court of Justice on 27 October 2005, the Commission brought this action.

17. The Commission claims that the Court should:

– declare that, by reserving exclusively to AICs authorised in France the exercise of activities related to the artificial insemination of cattle, in particular by establishing a general regime of exclusive rights over defined geographical areas in favour of the AICs and by making the activity of artificial insemination subject to the possession of an inseminator’s licence, the French Republic has failed to fulfil its obligations under Articles 43 EC and 49 EC;

– order the French Republic to pay the costs.

18. The French Republic claims that the Court should:

– dismiss the application;

– order the Commission to pay the costs.

IV – Legal analysis

19. A preliminary point to be noted is that the Court of Justice has consistently held that the question whether a Member State has failed to fulfil its obligations under Article 226 EC must be determined by reference to the situation prevailing in the Member State at the end of the period laid down in the reasoned opinion and that the Court cannot take account of any subsequent changes. ( ) Consequently, the reform of the legislation on the public artificial reproduction of ruminants, carried out in France in 2006 and entering into force on 1 January 2007, cannot be taken into account for the purposes of these proceedings.

A – The existence of obstacles to freedom of establishment and the freedom to provide services

1. Arguments of the parties

a) Freedom of establishment

20. The Commission maintains that conferring on authorised AICs only, for an unlimited period, exclusive rights to engage, in a defined geographical area, in the distribution of semen and insemination de facto prevents, or renders extremely difficult, the exercise of the right of establishment in France for the purpose of engaging in that activity. The Commission further contends that a similar effect was caused because an inseminator’s licence could not be obtained by veterinary surgeons in order to carry out insemination in a self-employed capacity, unless they had already entered into an agreement with the managing director of an AIC, the content of which agreement was not, moreover, specified from the outset but left as a matter for negotiation between the parties, thus resulting in discretionary practice which discouraged veterinary surgeons from undertaking such activity in that capacity. The Commission further points out that, where it was not justified on health grounds in the circumstances in which the service was provided, the obligation to store the semen at an AIC represented a further obstacle to the exercise of freedom of establishment in the semen distribution sector.

21. The Commission recalls that, according to case-law, the fact that a national measure applies without discrimination on grounds of nationality does not mean that the measure in question may not, in so far as it is liable to hamper or render less attractive the exercise by Community nationals of the freedom of establishment, prove to be incompatible with Article 43 EC. ( )

22. The French Government disputes that the exclusive rights over a defined geographical area conferred, for an unlimited period, on authorised AICs were such as de facto to prevent or render extremely difficult the exercise of freedom of establishment by operators from other Member States. It maintains, in particular, that there were, in French territory, areas with no authorised AIC in which operators from other Member States could open and operate an AIC by seeking the requisite authorisation, the granting of which was subject to the same conditions for both national operators and operators from other Member States.

23. The French Government also contends that to require an independent inseminator to conclude an agreement with an authorised AIC did not prevent veterinary surgeons from carrying out insemination in a self-employed capacity. It emphasises that this agreement, fixing the technical, administrative and financial conditions in which the independent operator was to carry out insemination, was intended to guarantee observance of the applicable rules and to ensure that the AIC was properly informed of the nature and content of the services provided by that operator. In principle, therefore, any operator, whether a French national or a national of another Member State, who possessed the necessary professional qualification, could apply for and obtain an inseminator’s licence and compete with the authorised AICs.

24. The French Government does, however, acknowledge that the national rules involved an obstacle to freedom of establishment. None the less, it insists that those rules did not discriminate in any way between national operators and operators from other Member States.

b) The freedom to provide services

25. The Commission maintains that the requirement to store semen at authorised AICs, which alone were authorised to supply that material to breeders, constituted a restriction on the freedom to provide the ‘distribution service’, which the Commission defines as ‘consisting in the whole range of operations necessary to enable a product to be forwarded and sold, from the point of its manufacture to its purchase by the final consumer’. In response to the French Government, which objects that Directive 88/407/EEC ( ) required the Member States to implement that obligation, the Commission states that the obligation to store semen intended for use in intra-Community trade, laid down by that directive on health grounds, relates solely to frozen semen and the stage prior to its dispatch from the production site, whereas the charge levelled against the French Republic concerned an obligation to store at the stage after dispatch.

26. Moreover, the Commission contends that the freedom to provide insemination services was hindered by the imposition of the requirement that persons wishing to engage in that activity should, if they were to obtain the requisite inseminator’s licence, conclude a prior agreement with the managing director of an authorised AIC. The Commission stresses that the conclusion of an agreement of that nature was in fact left to the discretion and good will of AIC managing directors, who refused, however, to enter into agreements with independent inseminators, that is to say, inseminators who were not employees of the AIC in question. While the Commission considers it legitimate to make the award of an inseminator’s licence subject to prior verification, by the veterinary authorities, of the applicant’s abilities, it does not, on the other hand, consider it legitimate to make that award conditional also on the conclusion of an agreement with the AIC, a condition which has nothing to do with investigating the applicant’s abilities and has actually proved to be discretionary and arbitrary. That condition was intended to consolidate the monopoly on the providing of insemination services arising from the exclusive geographical rights conferred on authorised AICs.

27. The Commission maintains that a further obstacle to the freedom to provide services is caused by the fact that it was impossible for service providers established in other Member States to offer both semen distribution services and insemination services because of the requirement that the semen should be deposited with authorised AICs which were alone authorised to supply it to breeders.

28. The French Government acknowledges that the national rules in question were an impediment to the freedom to provide insemination services, but disputes that they also presented obstacles to the freedom to provide the semen distribution services. In that connection, it observes that those rules enabled the breeders to choose directly the supplier of semen and to have the territorially competent AIC carry out the insemination using the semen offered by that supplier.

2. Assessment

29. The charges levelled against the French Republic by the Commission turn on three aspects of the French legislation on the artificial reproduction of cattle, in force until 31 December 2006: the exclusive rights over a defined geographical area conferred on AICs for the artificial reproduction of cattle; the conditions governing the award of an inseminator’s licence, and, more specifically, the requirement that independent inseminators had to enter into a prior agreement with an authorised AIC; ( ) the obligation to deliver the semen to and store it with an authorised AIC, once it had been dispatched from the production centre.

30. According to the Commission, one or other of those aspects resulted in restrictions on freedom of establishment and the freedom to provide services, in relation both to the semen distribution service and to the insemination service.

a) Complaints concerning the semen distribution service

31. Let me begin by drawing attention to the serious difficulty involved in determining whether there are any restrictions, arising from the abovementioned factors, of freedom of establishment and the freedom to provide services with reference to what the Commission, in its written pleadings, describes as the semen ‘distribution service’. That difficulty is caused by the fact that, in my view, the Commission itself has failed to define with sufficient clarity and precision the actual content of that service. In the reasoned opinion and in the application initiating the proceedings, the Commission states that, by ‘distribution service’, it means ‘the whole range of operations necessary to enable a product to be forwarded and sold, from the point of its manufacture to its purchase by the final consumer’. That definition is too vague, and no further light appears to be shed upon it by the prolix explanations provided in the Commission’s written answer to a specific question asked by the Court, in which the Commission distinguishes between a ‘technical’ and an ‘economic’ concept of the distribution service – which is sometimes referred to in the plural also – and refers to an extremely broad concept of distribution as a ‘commercial activity which may be engaged in by a producer, an intermediary, a wholesaler, a retailer or a cooperative’, and mentions more specifically ‘the possibility for any operator who possesses the appropriate professional qualifications to offer his services to breeders established in France’, ‘envisaging’ in that connection a range of possible activities, in relation to which it is not, however, certain that they are actually offered in geographical areas outside that Member State, pointing out that ‘the very concept of a commercial distribution service is, by its very nature, polymorphous and intangible’.

32. In my view, the failure to define, with sufficient clarity and precision, the service, other than the insemination service, whose provision in France, by operators from other Member States has, allegedly, been impeded or discouraged by the national legislation on the artificial reproduction of cattle, makes it impossible to declare any failure on the part of the Member State concerned to fulfil an obligation in that regard.

33. I would point out in that connection that, according to case-law, in both the reasoned opinion and, consequently, the action for failure to fulfil an obligation, which may not be based on pleas and grounds other than those put forward in that opinion, the complaints must be set out coherently and precisely, in order that the Member State and the Court may appreciate exactly the scope of the infringement of Community law complained of, a condition which is necessary in order to enable the Member State to avail itself of its right to defend itself and the Court to determine whether there is a breach of obligations, as alleged. ( )

34. Furthermore, it is clear from Article 38(1)(c) of the Rules of Procedure of the Court of Justice and the case-law pertaining thereto that the application must state the subject-matter of the dispute and a summary of the grounds, and that the statement must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to exercise its review. It follows that the essential elements of fact and of law on which an application is based must emerge coherently and comprehensibly from the text of the application itself. ( )

35. I therefore consider that, since they fail to meet the necessary conditions of clarity and precision, the complaints raised by the Commission concerning alleged restrictions on freedom of establishment and the freedom to provide services with reference to the semen distribution service (or services) must be dismissed as inadmissible.

36. Consequently, in this Opinion, I shall not consider the questions pertaining to the obligation to deliver the semen to and store it at an authorised AIC, after dispatch from the production centre. ( ) I would, moreover, add that the Commission has set out the complaint concerning that obligation in a manner that lacks clarity in both the application and the reply, as a result of which, for that reason also, I have to consider that conditions governing admissibility referred to in points 33 and 34 above have not been met.

37. I shall, instead, focus on the alleged restrictions of freedom of establishment and of the freedom to provide services with reference to the insemination service, in situations arising from the exclusive rights over defined geographical areas conferred on the authorised AICs to carry out that service, and the requirement that an agreement be concluded with an authorised AIC before an inseminator’s licence could be obtained (hereinafter also the ‘national rules at issue’).

b) Complaints relating to the insemination service

i) Preliminary considerations

38. The two aspects of the national rules at issue mentioned in point 37 above seem to me to be two sides of the same coin.

39. As the Court had occasion to state in its judgment in Centre d’insémination de la Crespelle, ( ) ‘by making the operation of the [AICs] subject to authorisation and providing that each centre should have the exclusive right to serve a defined area, the national legislation granted those centres exclusive rights’, ‘thus establishing, in favour of those undertakings, a contiguous series of monopolies territorially limited but together covering the entire territory of a Member State’.

40. The possibility, for which the rules at issue provide, that insemination activities could be carried out by licence-holders who were not AIC employees, might, on the face of it, seem at odds with the exclusive geographically defined rights conferred on the AICs in relation to insemination. But this is actually only an apparent contradiction, since it is clear from the rules themselves that insemination carried out by such persons must, in any event, take place under the authority of the territorially competent, authorised AIC, and subject to the technical responsibility of the AIC manager, and that the technical and financial, as well as the administrative procedures for that insemination could not be determined by the operator independently, but had to form the subject of an agreement with the managing director of the AIC. In those circumstances, it seems difficult to envisage the provision of insemination services by operators other than the AICs in a truly independent manner, and that would, moreover, have been incompatible with the abovementioned exclusive rights. It actually appears that, far from providing that service in competition with the AIC, and on the basis of a professional relationship established with a client breeder, provided they held the requisite licence, such operators were in fact able to carry out insemination as collaborators – albeit independent collaborators – of the AIC itself. ( )

41. Therefore, rather than reinforcing, as the Commission claims, the exclusive rights over a defined geographical area conferred on the AICs, the requirement that an agreement be entered into with the AIC as a prerequisite for obtaining an inseminator’s licence, is, in my view, an inherent part of those exclusive rights in the context of a system that, by reserving the insemination service for the authorised AICs, in any event sought to ensure that insemination activities could also be carried out, within – and not outside – the framework of those exclusive rights, by qualified persons who were not necessarily on the staff of an AIC.

42. Furthermore, in its written pleadings, the French Government clearly states that Article L. 653-7 of the Rural Code accorded the AICs an ‘exclusive right’ which the French Government itself defines as a ‘geographical monopoly’ on insemination, after stating, in its response to the Commission’s reasoned opinion, that the requirement that the inseminator enter into an agreement with an authorised AIC was ‘the direct consequence of the exclusive rights over the defined area’ which had been conferred on the latter.

43. I am, therefore, of the opinion that the two aspects in question must be considered together, both for the purpose of determining whether there is any restriction of freedom of establishment and the freedom to provide services, and for the purpose of assessing the reasons invoked by the French Government to justify any such restrictions.

44. As is well known, Community law does not generally prohibit the Member States from making a specific economic activity subject to a monopoly. That is borne out by Article 31 EC in particular, for Article 31(1) simply requires the adjustment of any State monopolies of a commercial character; it is further borne out by Article 86(1) EC which, by generally prohibiting the Member States from enacting or maintaining in force, in relation to public undertakings to which Member States grant special or exclusive rights, any measures contrary to the rules contained in the EC Treaty, necessarily implies that the Member States may accord certain undertakings exclusive rights and grant them a monopoly. ( )

45. As the Court has explained, however, that does not mean that all special and exclusive rights are necessarily compatible with the EC Treaty. ( )

46. Specifically with reference to monopolies on the provision of services, such as those which, it has been determined, result from the exclusive rights over a defined geographical area conferred on the authorised AICs by the national rules at issue, the Court has held that, even though they are not caught by Article 37 of the EC Treaty, which relates to trade in goods, they are incompatible with the principle of the free movement of goods under Article 30 of the EC Treaty, if they have an indirect influence on that trade by discriminating against imported products to the benefit of products of domestic origin. ( ) In its judgment in Société coopérative d’amélioration de l’élevage et d’insémination artificielle du Béarn, in particular, the Court found that the circumstances referred to by the national court and those which had come to light in the course of the proceedings before the Court of Justice were not sufficient to support the view that legislation of the kind which, in France, governs the artificial reproduction of cattle, indirectly established a monopoly hindering the free movement of goods, since any private breeder was free to request the AIC for his area to supply him with semen from a production centre of his choice, whether situated in France or abroad. ( )

47. It in its judgment in Centre d’insémination de la Crespelle, the Court pointed out that the mere creation of a dominant position by the granting of an exclusive right within the meaning of Article 90(1) of the EC Treaty was not, as such, incompatible with Article 86 of the Treaty, and that a Member State contravened the prohibitions contained in those two provisions only if, in merely exercising the exclusive right granted to it, the undertaking in question could not avoid abusing its dominant position. In that case, analysing the French legislation which set in place AICs authorised to operate exclusively in a defined zone, allowing them to require breeders who requested the AICs to provide them with semen from other production centres to pay the additional costs entailed by that choice, the Court found that although it left to the AICs the task of calculating those costs, that legislation did not lead the centres to charge disproportionate costs and thereby abuse their dominant position. ( )

48. In these proceedings, the Court is asked to rule, directly on this occasion (this not being a request for a preliminary ruling but an action for a declaration that a State has failed to fulfil an obligation), whether the national rules at issue, which have established a number of territorial monopolies on the provision of services, are compatible with other provisions of the EC Treaty, such as those which guarantee freedom of establishment and the freedom to provide services within the Community (Articles 43 EC and 49 EC). Consequently, the fact that, in the abovementioned judgments, the Court was not able to identify ways in which those rules were incompatible with the provisions of the EC Treaty certainly does not imply that a finding in favour of the Commission in these proceedings would be incompatible with the Court’s case-law.

49. There is no doubt that it is open to the Court to ascertain, on the basis of Articles 43 EC and 49 EC, whether the conferring by a Member State of exclusive rights to engage in economic activities is compatible with Community law.

50. In its judgment in ERT, ( ) not only did the Court accept that a monopoly on the provision of services, such as, in that case, a monopoly in the television sector in Greece, may infringe the rules of the EC Treaty on the freedom to provide services, in particular, because of the manner in which it is organised or exercised, but it also held, citing the precedent set by its judgment in Sacchi, ( ) that ‘Community law does not prevent the granting of a television monopoly for considerations of a non-economic nature relating to the public interest’. The requirement, under the rules of the EC Treaty on the freedom to provide services, that a Member State should be able to cite valid reasons for establishing a monopoly on the provision of services emerges with greater clarity from the judgment in Commission v Netherlands, ( ) a month after the judgment in ERT, when the Court states that ‘in order to establish whether a Member State may exclude the provision of certain services from free competition, it is a matter of determining whether the restrictions on the freedom to provide services thereby created can be justified [by overriding reasons relating to the public interest]’.

51. That was how, in its judgment in Läärä and Others, ( ) the Court was able to conclude that national legislation prohibiting any person other than the licensed public body from running the operation of slot machines, which involves no discrimination on grounds of nationality and applies without distinction to operators who might be interested in that activity, whether they are established in the Member State concerned or in another Member State, constitutes an impediment to the freedom to provide services in that it directly or indirectly prevents operators in other Member States from themselves making such machines available to the public, and must, therefore, if it is to be compatible with the EC Treaty, if it does not fall within one of the derogations expressly provided for by the Treaty (restrictions justified by the exercise of public authority or on grounds of public order, public safety or public health) be justified by overriding reasons relating to the public interest.

52. The considerations set out above in themselves intimate the conclusions which I shall reach below concerning the existence, in the case forming the subject-matter of these proceedings, of restrictions of freedom of establishment or the freedom to provide services.

ii) Freedom of establishment

53. According to case-law, all measures which prohibit, impede or render less attractive the exercise of freedom of establishment, under Article 43 EC, must be considered to be restrictions on that freedom. ( )

54. The French Government, although taking the view, contrary to the assumption made by the Commission, that the exclusive rights over a defined geographical area in favour of the AICs and the fact that the issue of an inseminator’s licence is conditional upon the conclusion of an agreement with the territorially competent AIC do not constitute a complete barrier to access for operators from other Member States to the activity of artificially inseminating cattle, acknowledges that those exclusive rights and that condition represent a restriction of freedom of establishment.

55. I am completely in agreement with that view.

56. In its judgment in Servizi Ausiliari Dottori Commercialisti, ( ) the Court held that national rules restricting the right to engage in certain activities to certain legal entities meeting strict conditions constituted a restriction of freedom of establishment, since they were liable to make more difficult, or even completely prevent, the exercise by economic operators from other Member States of their right to establish themselves in the Member State concerned, with the aim of providing the services in question. As Advocate General Ruiz-Jarabo Colomer explained, ( ) those national rules involved such a restriction because, inter alia, they granted those organisations an exclusive right to provide certain types of advice, creating two sectors, one with open access and the other restricted to those organisations and denied to other operators with the relevant professional qualifications, whether they were national operators or operators from other Member States.

57. All the more reason then that I must conclude that a restriction of freedom of establishment exists in this case. The fact that the authorised AICs had exclusive rights within a defined geographical area limited the total number of operators allowed to open and operate such centres in French territory, restricting it to just one in the part of that territory identified in the ministerial authorisation. The fact that the exclusive rights were of unlimited duration, which the French Government has not disputed, hampered the access of such operators, including those from other Member States, to the market in artificial insemination, reinforcing and protecting the position of the national operators who were already operating on that market.

58. Any opportunity to become established in France in order to exercise the activity of independent inseminator was made impossible by the conferring of exclusive rights on the authorised AICs to provide insemination services and the related requirement that inseminators who were not on the staff of an authorised AIC had to engage in their activity under the management and control of the territorially competent AIC, and subject to the technical responsibility of the manager of the AIC, and because they were therefore unable independently to determine with the breeder the methods and financial terms of the service, which had to form the subject-matter of an agreement with the AIC.

59. The exclusive rights in question over a specific geographical area and the related requirement to conclude an agreement with the AIC in order to obtain an inseminator’s licence therefore constituted, in my view, a serious obstacle to access to the market in artificial insemination in France and, consequently, a restriction of freedom of establishment under Article 43 EC, notwithstanding the fact that those measures applied without distinction to national operators and operators from other Member States. ( ) The fact that there was no discrimination depending on the operator’s Member State of origin is actually relevant only in the sense that it makes it possible to take into consideration, for the purposes of assessing the compatibility of the national rules at issue with Article 43 EC, reasons in the public interest, other than those set out in Article 46(1) EC, to justify the restriction which has been established.

c) The freedom to provide services

60. It is settled case-law that Article 49 EC requires not only the elimination of all discrimination against a person providing services on the ground of his nationality but also the abolition of any restriction, even if it applies without distinction to national providers of services and to those of other Member States, when it is liable to prohibit or otherwise impede the activities of a provider of services established in another Member State where he lawfully provides similar services. ( )

61. It is apparent from the description of the national rules at issue set out above that a transfrontier service provider wishing to engage, in French territory, in artificial insemination, in accordance with the freedom to provide services, would have had necessarily to apply for and obtain an inseminator’s licence in France. Even setting aside the conditions governing the issue of such a licence, it must be pointed out that the actual requirement of a licence, viewed in and of itself, constituted, in accordance with the Court’s settled case-law, ( ) a restriction on the freedom to provide services in so far as it is liable to prohibit or otherwise impede the provision of insemination services in France by operators established in other Member States where they lawfully provide similar services.

62. A further dissuasive effect resulted from the requirement that the insemination services be provided under the management and subject to the control of the territorially competent authorised AIC, and under the technical responsibility of the manager of that AIC, as well as that the methods, including the financial methods, of those operations had to be agreed with the AIC itself, so that it was impossible to engage in artificial insemination activities independently in competition with the AICs.

63. In my view, it follows that the exclusive geographical rights in question and the related requirement to enter into an agreement with the AIC in order to obtain an inseminator’s licence constituted a serious obstacle to the freedom to provide insemination services in France, within the meaning of Article 49 EC, notwithstanding the fact that those measures applied without distinction to national operators and operators from other Member States. The fact that there was no discrimination according to the operator’s Member State of origin is actually relevant only so far as it makes it possible to take into consideration, for the purposes of assessing the compatibility of the national rules at issue with Article 49 EC, reasons in the public interest, other than those set out in Article 46(1) EC – applicable also in the sphere of freedom to provide services by virtue of the reference made by Article 55 EC – to justify the restriction which has been established.

B – The justifications put forward by the French Government

64. It is clear from settled case-law that when national measures liable to hinder or make less attractive the exercise of freedom of establishment or the freedom to provide services apply without distinction to all persons or undertakings exercising an activity in the territory of the host Member State, they may be justified by overriding reasons relating to the public interest, provided that they are suitable for securing the attainment of the objective which they pursue and do not go beyond what is necessary in order to attain it, ( ) so long as there are no Community harmonising measures providing for measures necessary to ensure that those interests are protected. ( )

65. The case-file does not contain evidence to show that the restrictive measures at issue have been applied in a discriminatory fashion. The Commission has not challenged the French Government’s argument that they applied without distinction to national operators and operators from other Member States.

66. I shall therefore now turn to consider whether the reasons the French Government has invoked to justify the national rules at issue meet the criteria referred to in point 64 above.

67. In its rejoinder, the French Government has referred to the protection of bovine stock, the requirements of land-use planning and the protection of public health.

1. The protection of bovine stock.

68. The French Government maintains that the national rules at issue were designed to improve bovine stock and that the Court has already recognised, in its judgment in Nilsson and Others, ( ) that the protection of bovine stock constitutes an overriding reason relating to the public interest. It adds that, while Directives 77/504 and 87/328 harmonised the conditions governing the movement within the Community of pure-bred breeding animals of the bovine species, they did not harmonise the conditions governing the insemination of female animals of the bovine species.

69. Referring to the implementation in its territory of programmes of selection for progeny and stock conservation, the French Government points out that the exclusive rights over a defined geographical area conferred on the authorised AICs and the conditions governing the issue of an inseminator’s licence were the only way of guaranteeing accurate and comprehensive genetic information on cattle, which was essential to the continued genetic improvement of the species. Those measures in fact made it possible to centralise within a single body all the data on the breeding carried out by means of the insemination undertaken in a given area over which exclusive rights existed.

70. The Commission replies that the objective of protecting bovine stock falls within a sphere, namely zootechnical and pedigree requirements, which, as the Court recognised in its judgment in Centre d’insémination de la Crespelle, ( ) has been fully harmonised at Community level. It maintains that there is in fact no relationship between that objective and the conditions governing the act of insemination, which has no effect on the quality or provenance of the semen and, at most, involves considerations relating to health.

71. The reference to the full harmonisation which, according to the abovementioned judgment, has been achieved at Community level in terms of zootechnical and pedigree requirements does not seem to me to be relevant.

72. In paragraph 33 of Centre d’insémination de la Crespelle, the Court noted that ‘[a]s regards the reasons relating to the genetic improvement of bovine stock’, ‘Article 2(1) of Directive 87/328, which is designed to remove zootechnical obstacles to intra-Community trade in bovine semen, requires Member States to remove all barriers to entry into, or use within, their territory of bovine semen imported from other Member States in accordance with the conditions laid down in Article 4 of the directive’, and that ‘Article 2 of Directive 91/174 [( )] provides that marketing of semen of pure-bred animals may not be prohibited, restricted or impeded on pedigree grounds’. The Court concluded that ‘[i]t follows from those provisions that zootechnical and pedigree requirements have been fully harmonised at Community level’.

73. That line of argument seems to me to indicate that the full harmonisation which the Court thus established relates to the national measures designed to further zootechnical or pedigree requirements by means of restrictions on the importation of, trade in and use of bovine semen. ( ) Furthermore, in its judgments in both Gervais and Others ( ) and Nilsson and Others, ( ) the Court pointed out that Directives 77/504 and 87/328 are designed to harmonise the conditions governing the admission to reproduction of pure-bred bovine breeding animals and their sperm, with a view to removing the zootechnical obstacles to the free movement of bovine semen. The Court concluded from this both that ‘a requirement whose purpose or effect is to control or verify imports of bovine semen by reference to zootechnical or pedigree considerations could be laid down only in conformity with those directives’ ( ) and that ‘[t]hose directives do not govern the conditions regarding actual insemination or the training of inseminators; nor do they cover the issue of certificates or licences authorising the holders to carry out the regulated functions of inseminators’. ( )

74. The present case relates essentially to restrictions on the persons authorised to carry out insemination – and, therefore, on the conditions governing insemination per se or access to the function of inseminator – regardless of the semen used, and the Commission does not allege that those restrictions were used to control the genetic quality of the breeding animals in a manner for which the Community directives did not provide. ( )

75. It seems neither to me, nor to the French Government, that the harmonisation achieved through Directives 77/504, 87/328 and 91/174 prevents the Member States from relying on zootechnical or pedigree requirements to justify national measures which, like those at issue in this case, govern the service of inseminating cattle without involving restrictions on the import of, trade in or use of bovine semen originating in other Member States.

76. A further issue is whether the conditions governing the act of insemination may in fact affect the conservation and improvement of bovine stock. The positions of the parties on that point are diametrically opposed, with the Commission taking a negative and the French Government a positive view. It does not, however, seem to me that the Court need resolve the dispute, which is of a rather technical nature.

77. In my view, it is sufficient to establish that, according to the statements of the French Government, the national rules at issue were designed to protect bovine stock inasmuch as they made it possible to centralise the collection of data on breeding carried out in the territory by means of artificial insemination – that data being needed to implement the programmes of selection of progeny and stock conservation.

78. However, I fail to see why that centralised collection of data could not have been achieved using measures less restrictive than the regional monopoly on the insemination service accorded to the authorised AICs. The imposition on operators engaged in the artificial insemination of bovine animals of an obligation to forward to a body designated for that purpose information on the breeding carried out could, in my view, have permitted that information to be collected in the same centralised manner, but without creating the serious obstacles to freedom of establishment and the freedom to provide services that this monopoly entailed.

79. I therefore agree with the Commission when it observes that, in any case, the national rules at issue went beyond what was necessary in order to achieve the objective pursued of protecting bovine stock.

2. Land-planning requirements

80. The French Government claims that those rules also pursued a land-planning objective and that the Court had already recognised in its judgment in TK‑Heimdienst ( ) that an objective of that nature constitutes an overriding reason relating to the public interest. That objective required breeders to be able to use the insemination service in uniform conditions throughout French territory.

81. Because it was barely profitable, however, if no exclusive rights over a defined geographical area for its exercise existed, that service would not have been offered in the areas, amounting to some three quarters of French territory, where there is very little livestock farming. The French Government states that preserving livestock farming in those zones, where climatic and geographical conditions were not conducive to growing any kind of crop, had enabled it to conserve agricultural activity and the production of quality products with high added value, such as mountain cheeses.

82. In that connection, in my view, it will suffice to point out, as has the Commission, that those claims by the French Government are not supported by any information or statistical data enabling them to be evaluated. Consequently, there is no detailed evidence of the need for the exclusive geographical rights in favour of the authorised AICs in order to guarantee the insemination services in all areas of French territory.

83. Therefore, without it being necessary to consider whether land-planning requirements are in theory capable of justifying restrictions on freedom of establishment and the freedom to provide services, it cannot be considered to have been proved that such requirements existed in this case and were such as to require the establishment of a network of territorially defined monopolies for the provision of the insemination service.

84. Moreover, as the Commission emphasises, the justification at issue could not, in any event, hold good for those areas of French territory which did not possess the features referred to by the French Government.

3. The protection of public health

85. The French Government also invokes public health objectives, in terms of the protection of both animal and human health.

86. In the first place, it submits that the rules relating to the professional qualifications of operators who carry out insemination reflected concerns about the protection of animal health, because the act of insemination must comply with health and safety rules in relation to both the handling of the semen and contact with the animal. That act calls for great skill in order to avoid physical harm to the animal artificially inseminated. In addition, according to the French Government, the very decision to carry out insemination may affect the health of the animal, as the latter may be compromised, in terms of its fertility in particular, as a result of ill-judged cross-breeding.

87. In the second place, the system of inseminators’ licences, which included an investigation of fitness for the task, was necessary in order to safeguard also the health of operators carrying out insemination, an act involving risks in terms of both contact with a large animal and the use of liquid nitrogen, an extremely hazardous substance, in that it can cause severe burns on contact.

88. Finally, the issue of a licence served the purpose of protecting human health in terms of food security also, helping to meet the requirement of product traceability recognised by the Community legislature in the form of Regulation (EC) No 178/2002. ( ) The French Government maintains that the principle of product traceability also applies to semen, which is a living biological product underpinning the process of livestock production, and points out that the national rules required the inseminator to identify the female animals to be inseminated ( ) and to draw up an insemination list containing, among other things, information about the bull and the cow and the number of injections of semen used. ( ) According to the French Government, the AICs guaranteed the traceability of that semen, by providing for documentary checks, physical checks and checks on the identity of the semen, whatever its provenance.

89. It seems patent to me that, as the Commission has observed, the considerations set out in points 86 and 87 above cannot justify the restrictions of freedom of establishment and the freedom to provide services in question. Indeed, as the Commission’s representative confirmed at the hearing, in these proceedings no claim has been made against the Member State concerned regarding the requirement of an inseminator’s licence or the condition governing the issue of that licence, consisting of the submission of a certificate of fitness for the duties of an inseminator. The subject of the dispute is in fact the conferring of exclusive rights over a defined geographical area on authorised AICs and the condition governing the issue of the licence, namely the conclusion of an agreement with an authorised AIC. The French Government has not explained why, in the absence of such measures, and notwithstanding the checking of fitness for the duties of an inseminator required by the national rules governing the issue of an inseminator’s licence, human and animal health would have been put at risk.

90. As regards the requirement of product traceability, it is sufficient to point out that neither the obligations imposed on inseminators, referred to by the French Government, nor the checks on the semen by the authorised AICs, necessarily require exclusive rights over a defined geographical area in favour of those centres in relation to insemination services. It seems to me that it is perfectly possible to devise and carry out such obligations and checks in a system which does not provide for such exclusive rights.

91. Consequently, it is my view that the reasons relied on by the French Government in these proceedings to justify the national rules at issue fail to meet the criteria established by the case-law cited at point 64 above and cannot, therefore, justify the restrictions of freedom of establishment and the freedom to provide services resulting from those rules in relation to the service of artificially inseminating cattle. I therefore consider that the Commission’s action must be upheld in relation to those restrictions.

V – Costs

92. Pursuant to Article 69(2) of the Rules of Procedure of the Court of Justice, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Pursuant to Article 69(3), where each party succeeds on some and fails on other heads, the Court may order that the costs be shared or that the parties are to bear their own costs.

93. If, as I propose, the Court upholds the application in part only, that is to say, in so far as it concerns the restrictions of freedom of establishment and the freedom to provide services with reference to the service of carrying out the artificial insemination of cattle only, but not also the alleged restrictions of those freedoms in relation to the bovine semen distribution service, it seems to me to be fair to order that the costs be shared between the parties. To be more precise, I suggest that the French Republic should be ordered to pay two thirds of the total costs and the Commission to pay the remaining third.

VI – Conclusion

94. In the light of the above considerations, I propose that the Court should:

– declare that, by conferring on the artificial insemination centres authorised in its territory the exclusive right to provide the service of artificially inseminating cattle within the area defined in the measure authorising the opening and operation of any such centre, and, in connection therewith, by making the issue of an inseminator’s licence subject to the conclusion of an agreement between the managing director of a centre and the person applying for a licence, the French Republic has failed to fulfil its obligations under Articles 43 EC and 49 EC;

– dismiss the remainder of the action as inadmissible;

– order the French Republic to pay two thirds of the total costs and the Commission of the European Communities to pay the remaining third.