By Huang Jianwen, King & Wood Mallesons’ Investment Group

huang_jianwenThe amended PRC Food Safety Law (the “2015 Food Safety Law”) is regarded by many in the media as the harshest food safety law in history. The liabilities of food safety violators are significantly increased under the new food safety legislation. Moreover, it establishes a new and more refined food safety regulatory system that gives food safety regulators broader and more robust supervisory powers. The 2015 Food Safety Law was passed by the Standing Committee of the National People’s Congress on April 24, 2015 and will take effect on October 1, 2015.

According to Ms. Huang Wei, the deputy director of the administrative law office at the legal committee of the Standing Committee of the National People’s Congress, the 2015 Food Safety Law reflects the need to: (1) solidify the outcome of food safety regulatory reforms through changes in the law; (2) solve key issues in the area of food safety through the establishment of a more refined regulatory mechanism; and (3) deter potential food safety violators by establishing the harshest penalties for food safety violations.

The highlights of the 2015 Food Safety Law include the following.

1. Clear lines of regulatory authority

The China Food and Drug Administration (the “CFDA”) is the primary regulatory authority in charge of food safety. Other regulatory authorities such as the Health, Agriculture, Entry and Exit, Inspection and Quarantine and Quality Supervision Bureau will also regulate food safety and coordinate and share information with the CFDA with respect to food safety issues.

Moreover, the governmental departments above the county level are in charge of regulating food safety within their jurisdictions. In addition, the 2015 Food Safety Law improves upon the once segmented regulatory oversight of edible agricultural products.

2. Establishment of a food risk monitoring and evaluation mechanism

The 2015 Food Safety Law specifies the factors to be evaluated, the circumstances for risk evaluation, and the impact of the outcome of such evaluation.

Moreover, it also specifies that information should flow among the different governmental authorities as well as between the government and other stakeholders including food manufacturers and distributors, inspection and accreditation institutions, industrial associations, consumer associations and the news media.

3. An enlarged regulatory scope

The 2015 Food Safety Law strengthens the regulation of food additives, food related products and online food related transactions. For example, a third party online food transaction platform is required to register the real names of the food distributors which sell products on the platform and review their licenses. If the online platform fails to do so, it may be subject to compensation claims by consumers.

4. Regulatory oversight from field to table  

The 2015 Food Safety Law establishes a mechanism that oversees food safety from “field to table” which refers to the entire life cycle of a food product from production through consumption.

It encourages food manufacturers and distributors to collect and store manufacturing and distribution information with informatization means, produce food on a large scale, distribute food through chain operations, and purchase food safety liability insurance.

5. Strengthens the regulation of “special” foods

The 2015 Food Safety Law has specific rules for “special” foods such as health foods, baby and toddler foods, and genetically modified organism (“GMO”) foods.

Health Foods: The 2015 Food Safety Law establishes a catalogue of health food ingredients and a catalogue of functions that health foods can claim. In addition, it classifies health foods into two categories: (1) those that require registration; and (2) those that require record-filing. Whether a health food uses an ingredient not covered by the health food ingredient catalogue and whether a health food is imported to China for the first time will be important considerations in determining if such health food requires registration or record-filing. Such classification of health foods is a major departure from the registration and approval mechanism for health food in the 2005 Health Food Registration Administration Measures. In addition, the label, instructions, and advertisements of a health food must state that “the health food cannot be a substitute for drugs.”

Baby and Toddler Foods: Since the 2008 melamine incident, the safety of baby and toddler foods has drawn the attention of media and the public. The 2015 Food Safety Law requires manufacturers of baby and toddler foods to implement quality control measures from the time when the ingredients to produce the food enter the food manufacturer’s facilities to the time when the products exit such manufacturing facilities. The manufacturers must also inspect each batch of products to ensure food safety and file a record with the provincial food and drug administration with respect to food ingredients, additives, product formulations as well as labeling. As for baby formula and toddler formula, the 2015 Food Safety Law requires the recipe of the product to be registered with the CFDA. In addition, baby formula and toddler formula are not allowed to be repackaged. A manufacturer cannot use the same recipe to produce baby formula or toddler formula under different brands.

GMO Foods: GMO food labels must be placed on the GMO food product in an obvious position. A GMO food manufacturer or distributor who fails to do so will be subject to administrative penalties such as confiscating illegal income and products, fines, suspension of business, and revoking licenses.

6. Contains more details on criminal, administrative, and civil liabilities

Criminal Liability: The public security department will conduct an investigation if a food safety violation is suspected to constitute a crime. A person who is sentenced to a fix-term imprisonment due to a food safety related crime may not engage in food manufacturing and distribution for life. Furthermore, he or she cannot work as a food safety management personnel in a food manufacturer or distributor.

Administrative liability: The upper limit of food safety fines has been increased to thirty times the value of the relevant goods. The 2015 Food Safety Law also imposes more stringent penalties on repeat offenders. Individuals who know about illegal manufacturing and distribution activities but still provide facilities for such activities will be punished as well.

Civil Liability: The 2015 Food Safety Law allows consumers to claim compensation against food manufacturers or food distributors. Furthermore, it adds an option for consumers with respect to the claiming of punitive damages. Previously, a consumer may only claim an amount ten times the purchase price of the food product. Currently, a liquidated damage equivalent to three times the loss suffered by the consumer is also an option.

The 2015 Food Safety Law is a landmark piece of food safety legislation in the PRC. How it will eventually be implemented is a matter that will have to wait until the law becomes effective on October of 2015.

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