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Standards for Determining the Materiality of the Violations of Regulations regarding the Illegal Manufacturing and Selling of Food or Food Containers

David Tien/Helen Hai-ning Huang


I.     Background
 
A series of food safety scandals over the past few years have raised the general public's awareness on food safety. For the purpose of protecting the health of Taiwan citizens and preventing another major food safety incident, the authorities aim to set forth clearer standards for determining the materiality of food safety violations and to impose heavier penalties on the violators. As such, on December 21, 2017 and under the authority vested by Subparagraph 2, Paragraph 1, Article 44 of the Act Governing Food Safety and Sanitation (the "Food Safety Act"), the Ministry of Health and Welfare announced the "Standards for Determining the Materiality of Violations of Paragraphs 1 & 4 of Article 15 and Article 16 of the Act Governing Food Safety and Sanitation (the "Determination Standards") to clearly lay out the factors for consideration when determining the materiality of a violation and the standards for imposing heavier penalties.
 
II.    Paragraphs 1 & 4 of Article 15 and Article 16 of the Food Safety Act
 
Paragraph 1, Article 15 of the Food Safety Act states that "none of the following foods or food additives shall be manufactured, processed, prepared, packaged, transported, stored, sold, imported, exported, presented as a gift or publicly displayed: (1) those that have deteriorated or rotten; (2) those that are unripe and thus harmful to human health; (3) those that are toxic or contain substances or foreign materials that are harmful to human health; (4) those that are contaminated by pathogenic organisms, or have been established by epidemiological survey to be cause of food poisoning; (5) those with pesticide or veterinary drugs residue exceeding the permissible limits; (6) those that have been contaminated by and contain radioactivity or nuclear fallout exceeding the permissible limits; (7) those that have been adulterated or counterfeited; (8) those that have passed their expiry date; (9) those that have never been provided for human consumption and proven to be harmless to human health; or (10) those that contain food additives that are not approved by the central competent authority". Paragraph 4 of the same article stipulates that "beta-agonists shall not to be detected in locally produced or imported meat products and other meat-related products, with the exception that the central competent authority may set a permissible limit of beta-agonists after assessing relevant health risks in accordance to the citizens' diet habits". Paragraph 1, Article 15 of the Food Safety Act covers the majority of food safety incidents while Paragraph 4 is specific to the management and control of ractopamine residues.
 
Article 16 of the Food Safety Act provides that "none of the following kitchen utensils/tableware, food containers or packaging, and food cleansers shall be manufactured, sold, imported, exported or used: (1) those that are toxic; (2) those that tend to cause harmful chemical reactions; (3) those that are otherwise harmful to health; or (4) those that may be harmful to health as indicated by risk assessment results".
 
Subparagraph 2, Paragraph 1, Article 44 of the Food Safety Act prescribes that material violations of Paragraphs 1 & 4 of Article 15 or Article 16 of the Food Safety Act are subject to a fine between NT$60,000 and NT$200 million; the competent authority may also order the violator to cease its business, suspend its business operation for a specified period of time, revoke in part or in whole the business items specified on its company registration, business registration, and/or factory registration, or revoke its registration as a food business; and no re-registration of such business items or registration can be filed within one year after the rescission.
 
III. Determination Standards
 
According to Point 1 of the Determination Standards, the "materiality" referred to in Article 44 of the Food Safety Act means "when a violation has severely compromised the circulation of food products, the order of the food market, or the sanitation, safety and quality of food products". And when determining the materiality of a violation to Paragraphs 1 & 4 of Article 15 or Article 16 of the Food Safety Act, the competent authority shall take the following factors into consideration: "(1) the number of the violator's previous violations to the Food Safety Act; (2) whether the violation is an intentional offence or is caused by negligence; (3) the violator's level of intelligence and knowledge; (4) the quantity of the illegal products in circulation, the range of circulation and the prices of the illegal products; (5) how long did the violation last; (6) the amount of the unlawful gains; (7) the extent of harm the violation has inflicted on consumers' life, body, health or assets; and (8) the violator's attitude and behavior with respect to the prevention of danger or harm after he/she committed the offense". The Determination Standards also suggests the competent authority to invite scholars, experts and representatives from various institutions to form a review committee to determine the materiality of the food safety violations.
 
In addition, Points 2 and 3 of the Determination Standards specifically sets forth different levels of penalties according to the severity of the offense:
 
1.      Unless there are extraordinary circumstances, the following violations shall be deemed material and the competent authority may require the violator to suspend its business operation for a specified period of time:
 
(1)   Violations where the revenues from selling illegal products exceed NT$10 million; or
 
(2)   Violations where the illegal products have caused actual damages to human health.
 
2.      Unless there are extraordinary circumstances, the following violations shall be deemed material and the competent authority may require the violator to cease its businesses, revoke in part or in whole the business items specified on its company registration, business registration, and/or factory registration, or revoke its registration as a food business; and no re-registration of such business items or registration can be filed within one year after the rescission.:
 
(1)   Violations where the revenues from selling illegal products exceed NT$30 million; or
 
(2)   Violations where the illegal products have caused deaths.
 
The Determination Standards explicitly provides that when assessing the materiality of a food safety violation, the competent authority shall still conduct a comprehensive evaluation of the crime based on the 8 factors under Point 1, instead of forming its judgment based solely on the criteria under Points 2 and 3.
 
IV. Conclusion
 
The Determination Standards clearly defines the scope of "materiality" referred to in Paragraph 1, Article 44 of the Food Safety Act and enumerate the factors to be taken under consideration when the competent authority is gauging the materiality of a violation, which brings clarity to the rules for imposing heavier sanctions on major food safety violations. Food businesses should therefore pay special attention to the violations that will automatically be deemed material and implicate heavier penalties, in order to prevent being forced to cease or suspend its business and to protect its company and/or food business registrations from being revoked.

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