The case sparked immediate health concerns but prosecutors were quick to quell fears, saying there was no evidence the meat was harmful based on toxicology tests.
It follows a Europe-wide health scare earlier this year when horsemeat was found in millions of ready meals labelled as containing only beef.
The arrests were made at various locations in the south of France following a tip-off that 200 horses, including 60 that had been owned by pharmaceutical giant Sanofi, ended up in abattoirs after their veterinary papers were falsified, a police source told AFP.
Among those arrested were four vets and 13 meat dealers, including one based in Narbonne, southwestern France, who is suspected of being the ringleader of the illicit trade, prosecutors and police sources said.
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A forger who faked health certificates for the horses was also involved.
Brice Robin, the prosecutor in the southern city of Marseille dealing with the case, said Sanofi -- which sold its animals to a horse dealer -- had done so "in an entirely legal manner".
It said the horses had been used to provide blood for the manufacture of serums against tetanus and rabies and stressed they had not been used for drugs testing.
"The horses are all micro-chipped for traceability and they do not present any danger in the event of human consumption," a spokesman said.
"It is specified in their sales certificates that these horses are not to be introduced to the food chain, but that is as a precautionary measure, not because there is any danger."
"It's different. In this case there could be a health problem," Hamon told RTL radio.
But Robin said there was "absolutely no evidence through toxicology tests that these animals were harmful to human health."
Eating horsemeat is regarded as taboo in some European countries, notably Britain, but is still widespread in Belgium, France, Spain and Italy, although consumption is in long-term decline.