The arrests were made at various locations in the south of France following a tip-off that hundreds of horses, including some that had been owned by pharmaceutical giant Sanofi, were sold to abattoirs after their veterinary papers were falsified, a police source told AFP.
More than 100 officers were involved in raids at several Sanofi offices and at various abattoirs, including one in Gerona in northern Spain.
Among those arrested were at least three vets and several meat dealers, including one based in Narbonne in southwestern France who is suspected of being the ringleader of the illicit trade, police sources said.
Sanofi said in a statement that the company was cooperating with the investigation into "possible fraud" and that it had sold around 200 horses in the last three years, generally to veterinary colleges, individuals or horse centres.
A police source said the Sanofi horses would have been used either to provide blood for use in vaccines or for testing drugs still in development.
"That does not mean to say that these horses pose a risk for the consumer but they should never have found their way on to diners' plates," the source said.
The case follows a Europe-wide health scare earlier this year when horsemeat was found in millions of ready meals labelled as containing only beef.
Benoit Hamon, the French minister responsible for consumer affairs, said the latest episode was potentially more worrying than the labelling scandal, which centred on a French company, Spanghero.
"It's different. In this case there could be a health problem," Hamon told RTL radio.