After 9 rounds of negotiation, the amended articles of the Act Governing Food Safety and Sanitation finally passed their third reading at 4:30 in the evening. In total, legislators proposed 19 versions, and 20 articles were ultimately amended. The key points of the amendments include: reversal of the burden of proof, a substantial increase in corporate fines to 2 billion, confiscation of illegal profits to be incorporated into the food safety fund, and a requirement that feed and food factories be managed under separate plants and separate licenses, among others.

What matters most directly to consumers is the "reversal of the burden of proof." In the past, consumers had to provide evidence that they suffered harm from eating tainted food; in the future, the burden of proof falls on the manufacturer, which must prove that its product is harmless or that it has exercised due care. The Consumers' Foundation believes this is a major victory for consumers and will greatly increase the success rate of consumer lawsuits. Below is a summary and analysis of the key points of this amendment to the Food Safety Act.

1. Reversal of the burden of proof

Amendment to Article 56 (excerpt)

When a food business violates the provisions of Article 15, Paragraph 1, Subparagraphs 3, 7, and 10, or Article 16, Subparagraph 1, thereby causing harm to consumers, it shall be liable for compensation. However, this shall not apply if the food business proves that the harm was not caused by its manufacture, processing, blending, packaging, transportation, storage, sale, import, or export, or that it exercised considerable care to prevent the occurrence of the harm.

Even if the consumer has suffered no property damage, the consumer may still claim compensation of a corresponding amount, and may apply the provisions of Articles 47 to 55 of the Consumer Protection Act to file a consumer lawsuit.

If it is difficult or impossible for consumers to prove the actual amount of damage, they may request the court to calculate it at no less than 500 yuan and no more than 300,000 yuan per person per incident, based on the circumstances of the infringement.

Analysis of this article:

In past food safety litigation, consumers had to prove that they suffered losses from eating tainted food, but most tainted food is not acutely toxic, making it very difficult for consumers to prove causation, leaving them with no way to seek compensation.

The most classic case is the plasticizer class action, in which the Consumers' Foundation sought 7.8 billion in compensation from manufacturers on behalf of consumers, but when the verdict was handed down in October last year, the judge held that consumers had failed to present strong evidence of harm, and in the end awarded only 1.2 million.

The newly amended law reverses the burden of proof. If food contains toxic or harmful substances, is adulterated or counterfeit, or contains additives not approved by the central competent authority, or if food containers are toxic, thereby harming consumers' rights and interests, the business must prove that the harm was not due to its own negligence or that it has fulfilled its duty of considerable care; otherwise it must compensate consumers.

In addition, even if consumers cannot prove the amount of damage, the court may take the circumstances into account and award 500 to 300,000 yuan per person per incident, meaning consumers can receive at least 500 yuan in compensation.

When the Food Safety Act was amended in January this year, the burden of proof was the focus of contention, but some legislators worried that small businesses such as night markets and roadside stalls could not afford it, so it was not passed in the end. It was only incorporated into law after another tainted oil scandal broke out. However, it does not distinguish by scale, meaning night markets and roadside stalls may also be penalized. The public questioned that large manufacturers have abundant capital and the capacity for testing and litigation, so in the end only small vendors might be penalized.
In response, Hsu Ming-neng, Deputy Minister of Health and Welfare, said that during negotiations many legislators believed there was no need to distinguish by scale, "we respect the legislators' views," and the administrative authorities will fully enforce the law.

The office of Legislator Yu Mei-nu, who proposed this version, pointed out that this law is not intended to target small vendors. The Consumer Protection Act already stipulates that businesses must prove no-fault liability, and the Food Safety Act only requires manufacturers to "presume" no fault, which is already much more lenient. In other words, when small vendors purchase goods, as long as they obtain certificates from upstream businesses or carry out relevant control measures, this counts as fulfilling their duty of care; moreover, since businesses have contractual relationships with one another, it is relatively easy for downstream businesses to seek compensation from upstream ones.

Lu Yun, chairman of the Consumers' Foundation, believes that the reversal of the burden of proof is great news for consumers and very helpful for future class actions. Although small vendors may be affected in the short term, in the long term it can promote positive industry development, and businesses will pay more attention to the sources of raw materials.

2. Separate plants and separate licenses for food, feed, and chemical management

Amendment to Article 10

The factory registration of a food business shall be handled by the industrial competent authority together with the competent authority.
The buildings and equipment of a food factory shall conform to factory establishment standards; the standards shall be prescribed by the central competent authority together with the central industrial competent authority.

Factories for food or food additives shall be established separately and shall not simultaneously engage in the manufacture, processing, and blending of non-food products at the same factory site and plant. However, this shall not apply to pharmaceutical manufacturing businesses that also manufacture food and have been examined by the central competent authority as conforming to Good Manufacturing Practice for drugs.

If, before the amended articles of this Act promulgated on O month O day of the Oth year of the Republic of China take effect, the factories referred to in the preceding paragraph have not been established separately, the central competent authority shall announce this within six months after the amended articles take effect, and completion shall be carried out within one year after the announcement.

Analysis of this article:

In September this year, it was revealed that Chang Guann Company used waste cooking oil, and later it was further exposed that Ting Hsin Company used Vietnamese feed oil, implicating hundreds of downstream businesses. The well-known large manufacturer Uni-President Enterprises was also affected. Among them, Ting Hsin, Chang Guann, and their upstream manufacturers all concurrently operated food and feed businesses. Some businesses still argued to this day that the imported feed oil was stored in the feed plant area and did not flow into edible tanks, while the Council of Agriculture oversaw feed and the Ministry of Health and Welfare oversaw food, with neither side's information flowing to the other and their data not cross-checked, creating a major loophole in food safety.

The newly amended articles provide that factories for food or food additives shall not simultaneously engage in the manufacture, processing, or blending of non-food products, but pharmaceutical manufacturing that has been examined by the central competent authority as conforming to Good Manufacturing Practice for drugs may concurrently operate food.

For example, in the future Uni-President may likewise concurrently operate food and feed, but the two plant areas must be separated to prevent mutual diversion. The Ministry of Health and Welfare said that Taiwan has more than 300 food factories that also operate feed factories.

When this article was reviewed by the Legislative Yuan's Social Welfare and Environmental Hygiene Committee on October 8, the Food and Drug Administration of the Ministry of Health and Welfare initially firmly opposed it, worried that separate plants would deal a blow to small manufacturers, and hoped that management could be done by "zoning within the same plant." But that same day the second wave of the feed oil mixed into edible oil case broke out, with Ting Hsin's subsidiary Cheng I Company being exposed for purchasing feed oil, and coupled with the ensuing Vietnam Dai Hanh Phuc feed incident, the FDA finally, under pressure from legislators, agreed to separate-plant, separate-license management.

The FDA will, within six months after the articles take effect, publish the businesses that have not yet separated their plants and licenses, and completion shall be carried out within one year.

3. Substantial increase in corporate fines and recovery of improper profits

Amendment to Article 49

A person who commits an act under Article 15, Paragraph 1, Subparagraphs 3, 7, or 10, or Article 16, Subparagraph 1, shall be punished by imprisonment for not more than 7 years, and may in addition be fined not more than NT$80 million. If the circumstances are minor, the person shall be punished by imprisonment for not more than 5 years, detention, or in addition a fine of not more than NT$8 million.

A person who commits an act under Article 44 through the preceding article, where the circumstances are serious enough to be likely to harm human health, shall be punished by imprisonment for not more than 7 years, and may in addition be fined not more than NT$80 million; if it causes harm to human health, the person shall be punished by imprisonment for not less than 1 year and not more than 7 years, and may in addition be fined not more than NT$100 million.

A person who commits the crime in the preceding paragraph and thereby causes the death of another shall be punished by life imprisonment or imprisonment for not less than 7 years, and may in addition be fined not more than NT$200 million; if it causes serious injury, the person shall be punished by imprisonment for not less than 3 years and not more than 10 years, and may in addition be fined not more than NT$150 million.

A person who commits the crimes in Paragraph 1 or Paragraph 2 through negligence shall be punished by imprisonment for not more than 2 years, detention, or a fine of not more than NT$6 million.

If the representative of a legal person, or the agent, employee, or other practitioner of a legal person or natural person commits the crimes in Paragraph 1 through Paragraph 3 in the course of performing business, in addition to punishing the person who committed the act, the legal person or natural person shall be fined not more than ten times the amount for each such paragraph, and when imposing the fine, the provisions of Article 58 of the Criminal Code shall be taken into consideration.

Analysis of this article:

Article 49 was the article negotiated for the longest time between the ruling and opposition parties, with the blue and green camps each taking positions on the "decriminalization of legal persons." The cause was last year's Tatung oil adulteration case, in which the Changhua Health Bureau imposed an administrative penalty of 1.85 billion on Tatung Chang Chi Company under the Food Safety Act, while after trial the Changhua District Court sentenced Tatung Chang Chi Company to a criminal fine of NT$50 million. Because Article 26, Paragraph 1 of the Administrative Penalty Act provides for "no double punishment for one act," and criminal law takes precedence over administrative law, the original high fine imposed by the Changhua County Health Bureau on Tatung Chang Chi Company was revoked.

In view of this, Kuomintang legislators and the Executive Yuan originally proposed deleting the provisions on corporate fines in Article 49, Paragraph 5 of the Food Safety Act, intending to technically resolve the "no double punishment for one act" issue.

However, the Judicial Yuan and opposition legislators believed that this would amount to the "decriminalization of legal persons." Judicial Yuan officials held that criminal penalties have a basic structure of principal punishment and accessory punishment, with the principal punishment determining guilt and imposing a fine and the accessory punishment then confiscating illegal gains. If the relevant provisions were deleted and, as proposed by the Executive Yuan, recovery of illegal gains were added, there would be doubt as to the confiscation of the property of "those not convicted."

After more than 5 hours of negotiation between the ruling and opposition parties at the Legislative Yuan yesterday, consensus was finally reached. The Executive Yuan's version of the amendment for the "decriminalization of legal persons" was not adopted, but the penalties were substantially increased. If a product produced by the actor causes death, the maximum fine may be 200 million, and in addition a legal person or natural person may be fined not more than 10 times the amount, meaning that if it causes death, the maximum fine may be 2 billion.

As for improper profits, the ruling and opposition parties specially enacted Article 49, Paragraph 1, providing that regardless of whether the proceeds of crime belong to the perpetrator, they must be returned to the victim, and the remainder will be confiscated. Moreover, if the offender intentionally transfers assets to a third party, the illegal gains of the third party (whether a natural person or a legal person) may also be recovered.

4. Confiscated improper profits incorporated into the food safety fund

Amendment to Article 56-1 (excerpt)

To protect the rights and interests of consumers in food safety incidents, the central competent authority may establish a food safety protection fund and may commission other agencies (institutions), legal persons, or groups to handle it. The sources of the preceding fund are as follows:

2. Fines, confiscations, recovery, or compensation paid in cash or proceeds from the sale thereof imposed and paid under this Act.

Analysis of this article:

When the law was amended in January this year, the long-called-for food safety fund was finally legislated, and today its sources were further expanded. In the future, whether it is confiscated proceeds of crime or the confiscation or recovery of illegal gains, all will be incorporated into the food safety fund. The main uses are as follows:

1. Subsidizing consumer group litigation; 2. In major food safety incidents, allocating funds to conduct human health risk assessments; 3. If workers are dismissed, transferred, or subjected to unfavorable treatment for reporting illegal food safety incidents, subsidizing litigation-related costs; 4. Whistleblower rewards; 5. Other related costs that promote food safety.

The Consumers' Foundation, which frequently files class actions for consumers, believes that expanding the fund's sources is a good direction. Lu Yun revealed that in the ongoing plasticizer and Pang Da Ren bread litigation, although the government has subsidized resources, the amount is not large, and some were even promised but not disbursed. "The litigation has indeed been affected by insufficient funding."

He believes that, in addition to allocating funds from the food safety fund, the government should include food safety litigation funding when reviewing the budget, rather than waiting until an incident breaks out and commissioning the private sector to litigate before disbursing money.

But Hsu Ming-neng believes this is not feasible, because budget allocations must be written off, and if there is no group litigation for an entire year, the funds cannot be written off, so case-by-case application is more appropriate.

Other important amended articles:

1. Article 7
Categories announced by the Ministry of Health and Welfare, businesses above a certain scale, and listed and OTC companies must, following the example of I-Mei Company, establish laboratories and conduct self-inspection.

2. Article 9
In conjunction with the tracking and tracing system, the central competent authority will announce in stages that businesses shall use electronic invoices. Those who issue false invoices or fail to issue them may be fined from 30,000 to 3 million.

3. Article 2-1
The food safety meeting shall be institutionalized, with the Premier of the Executive Yuan serving as convener of the food safety meeting, inviting heads of various ministries and commissions, scholars and experts, and civil groups, meeting at least once every three months, and the results shall be submitted to the Legislative Yuan for reference.

4. Article 35
Compound food additives shall be accompanied by a product composition report from the manufacturer or responsible manufacturer in the country of origin, as well as an official health certificate from the exporting country, for inspection by competent authorities at all levels, but flavorings are not subject to this restriction.

5. Article 49-2
The concept of an abstract endangerment offense is introduced. As long as a tainted food business manufactures a product that is likely to cause harm and the circumstances are serious, it can be penalized without proving that harm was caused, with a maximum punishment of imprisonment for not more than 7 years and may in addition be fined 80 million.