Monthly Newsletter

May 2015

New Food Safety Law Passed and to Take Effect in October

On April 24, the Standing Committee of the 12th National People's Congress passed the new Food Safety Law of the People's Republic of China (the "Food Safety Law") at the 14th meeting and the new Food Safety Law will take effect on October 1, 2015.

The newly-amended Food Safety Law further highlights the liability of food producers and operators as well as the regulatory responsibility of regulators; improves the supervision of health care foods, formulas for special medical purpose, and infant formulas and foods; and tightens the regulation of highly toxic and extremely poisonous pesticides. The 2015 Food Safety Law provides that, where entities producing and operating genetically modified food (GMF) fail to affix labelling under the rules, food and drug departments of people's governments above the county level shall confiscate their illegal proceeds as well as foods and food additives used in the illegal production and operation, and may confiscate tools, facilities, raw materials, and other items that are used for illegal production and operation. In addition, where consumers purchase foods through online food trade third-party platforms and if their legitimate rights and interests are prejudiced, they may claim compensation from online food operators or food producers.

Provisions on the Prohibition of the Abuse of Intellectual Property Rights to Exclude or Restrain Competition

The State Administration for Industry and Commerce ("SAIC") has released the Provisions on the Prohibition of the Abuse of Intellectual Property Rights to Exclude or Restrain Competition (the "Provisions") with effect from August 1, 2015.

The Provisions fill a gap in the legislations of China governing the anti-monopoly issues where IP rights are concerned, and are aimed at balancing the interests of owners of IP rights and related parties to encourage innovation and fair competition. It is observed that there has been increasingly fierce conflicts between the exclusivity of IP rights and the anti-monopoly rules, and thus the anti-monopoly law enforcement authorities have been paying more and more attention to the acts of excluding or restraining competition by abusing IP rights. The noticeable cases of Huawei vs. IDC re license of essential patents of standards, and the big fines imposed by NDRC on Qualcomm for its monopoly acts, are typical cases in this regard.

The Provisions enlists the acts of abusing IP rights, including monopoly agreement and abusing dominant market position, such as restraints on transactions, tied sale, unreasonable restrictive conditions in transactions, differential treatment to deal counterparts under the same conditions. Meanwhile, the Provisions make elaboration and regulation for the first time in the legislation of China on some important anti-monopoly theories and principles, such as the safe harbor principle, the principle of necessary facilities and essential patents of standards.

MOF Encourages Resolution of Existing Debts of Financing Platforms through PPP

The Ministry of Finance ("MOF") has recently issued the Guidelines on the Demonstration of the Fiscal Capacity for Public-Private Partnership Projects (the "Guidelines") for implementation as of the date of promulgation.

The Guidelines encourage regions included in the list of regions subject to early warnings of high risk of local government debts to adopt the mechanism of public-private partnership ("PPP") to resolve the existing debts of local financing platform providers, while remaining prudent in controlling the scale of new PPP projects. The Guidelines specify that the main responsibilities of fiscal expenditure throughout the life cycle of a PPP project cover equity investments, operating subsidies, risk obligations and investments in supporting facilities. Financial departments (or PPP centres) shall take into consideration various factors such as the characteristics, scenarios and probability of occurrence of all kinds of expenditure responsibilities and conduct separate estimates of the fiscal expenditure responsibilities for each project throughout its life cycle. The expenditure arranged for all PPP projects out of the general public expenditure budget each year shall not exceed 10% of the budget.

(Source: www.mof.gov.cn)