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Focus on Regulation

Hogan Lovells publishes Demystifying the U.S. CLOUD Act

Hogan Lovells has published Demystifying the U.S. CLOUD Act, a detailed analysis of the impact of the Clarifying Lawful Overseas Use of Data Act (CLOUD Act) on non-U.S. businesses and individuals who use cloud storage solutions.

Demystifying the U.S. CLOUD Act was written by Hogan Lovells partners Winston Maxwell and Mark Brennan, and senior associate Arpan Sura. Continue Reading

Jabir and others v. KiK Textilien und Non-Food GmbH – Dortmund court dismisses lawsuit

Yesterday, the Regional Court (Landgericht) of Dortmund dismissed the claims in Jabir and others v. KiK Textilien und Non-Food GmbH (Case No. 7 O 95/15) based on the statute of limitations.  The case concerned claims for personal injury and death brought by four Pakistani nationals against German retailer KiK Textilien and Non-Food GmbH (“KiK”) in relation to a fire in the Karachi factory of KiK’s supplier Ali Enterprises.  The case is noteworthy, as it was the first time that damages claims based on the liability of a transnational company for human rights violations abroad have been pursued before German courts (see our previous blog post here).

The Dortmund court found that the claims are time-barred under Pakistani law, which was applicable to the case pursuant to the Rome II Regulation.  The court concluded that the two-year limitation period under Pakistani law had expired before the claims were filed and that the statute of limitations had neither been waived nor suspended.   According to the court, compensation already paid by KiK in this case was merely a voluntary “ex gratia” payment that did not amount to a written acknowledgement of liability, which could have extended the applicable limitation period.  The court further noted that the parties’ settlement negotiations before the claims were filed did not amount to an agreement on the applicability of German law in accordance with Article 14(1) lit. a Rome II Regulation, which could have subjected the claims to the longer three-year limitation period under German law.  The claimants still have the option to appeal the Dortmund court’s decision.

As the dismissal of the claims based on the statute of limitations means that the Dortmund court will not decide on the merits of the case, the question of whether and under which circumstances transnational companies could be liable for human rights violations in their supply chain abroad remains unanswered.  A similar claim, if brought within the limitation period, could well succeed before German courts.  It remains to be seen which position German courts will take in this regard, not only under common law principles as in this case, but also under German law.  The decision also underscores the importance of considering the nature of any payments made pursuant to any non-judicial process.

Pharma Companies May Benefit from Proposed Patent Law Changes in China; Public Comment Invited

On January 4, China’s National People’s Congress (NPC) released draft amendments to the Chinese Patent Law, proposing expanded and enhanced protections that may provide real benefits to companies that develop new drugs.  A potentially important condition to one of the key proposed changes specific to new drugs is that it would be available only for products that are submitted for marketing approval concurrently in China and other countries.  Although clearly intended to motivate companies to prioritize seeking new drug approvals in China, the proposed patent term extension would appear to be limited to products that are first submitted for marketing approval to China and another country, and would not apply to products first filed only in China.  As a practical matter, this may limit the usefulness of the provision.

The most significant change that’s targeted to drug products would be the possibility of Continue Reading

China antitrust authority consults on agreements rules

On 3 January 2019, the State Administration for Market Regulation (SAMR) released a draft of the Regulation on the Prohibition of Monopoly Agreement Conduct (Draft) on its website, inviting comments from interested stakeholders. The consultation period ends on 3 February.

The Draft is the first significant normative output in the Anti-Monopoly Law (AML) field after the establishment of SAMR and the transfer of antitrust powers from the three prior antitrust units at the National Development and Reform Commission (NDRC), the State Administration for Industry and Commerce (SAIC), and the Ministry of Commerce to SAMR in Spring 2018.


The Draft is divided into 5 chapters, and has 44 provisions. Unlike the prior regulations adopted by SAMR’s predecessor bodies NDRC and SAIC, the Draft contains both substantive and procedural provisions in the same legal text.

The bulk of the agreements-specific provisions can be found in the second chapter of the Draft. In this chapter, SAMR provides guidance on the concept of “concerted practice,” largely reflecting the approach laid out in prior NDRC and SAIC regulations. The chapter also puts forward more details on both the horizontal agreements prohibitions in the AML – price-fixing; output restriction; market partitioning; technology-related restrictions; and collective boycott – and the resale price maintenance (RPM) prohibition as the only explicitly outlawed vertical restraint.


At Article 13, the Draft states that agreements not explicitly listed in the AML can be deemed as unlawful monopoly agreements “if there is evidence proving [they] eliminate or restrict competition.” Implementing the agreements-related “catch-all clauses” in the AML, this provision lays out a number of factors which SAMR should consider before holding a non-listed agreement to be unlawful.

Article 13 is interesting for several reasons. First, the reference to the evidence on the elimination or restriction of competition could be interpreted as introducing the concepts of “per se” illegality and “rule of reason” through the backdoor. One interpretation of the provision would be that all types of agreements listed in the AML – basically, cartels and RPM – would be illegal without the need to prove an adverse effect on competition, while a showing of such effect would be required for non-listed agreements. In that sense, this provision is likely to reignite the debate among Chinese courts and academia as to what kind of analysis RPM should be subject to.

Second, Article 13 limits the use of the agreements-related catch-all clauses to SAMR at the national level, excluding local SAMR offices (the AML also excluded the possibility of courts using the catch-all clauses).

Article 14 of the Draft contains a further limit on the use of the catch-all clauses in that it provides market share “safe harbours” for horizontal and vertical agreements not explicitly listed in the AML (15% and 25%, respectively). The safe harbours are drafted as presumptions which can be overturned by evidence to the contrary.

Beyond agreements

Even though the title of the Draft focuses on monopoly agreements, many of its provisions go beyond agreements strictly speaking. As such, the first chapter contains rules on the jurisdictional allocation of work between SAMR and its local offices, while most of the provisions in the third chapter regulate the investigation process, which should in principle be largely the same for both agreements and abuse of dominance cases.

Although not specific to agreements, some of these provisions give interesting insights into the set-up and enforcement structure of SAMR and its offices. For example, the Draft confirms the general delegation of AML enforcement powers to the SAMR offices at the provincial level, as laid out in a policy document issued at the end of 2018. Given that the antitrust-related manpower of SAMR at the national level is quite limited, the availability of larger teams in the provincial offices will allow the authority to increase its overall workload.

Yet the broad scope of the Draft also provides uncertainty – for example, it remains to be seen if and when there will be an implementing regulation providing guidance on the AML’s abuse of dominance provisions, or what it would look like. Similarly, it is not clear how the Draft will relate to the set of AML implementing guidelines which are reportedly in the process of being adopted and released in the name of the Anti-Monopoly Commission, a not-permanent institution ranked higher than SAMR. These guidelines may deal with similar issues as the Draft, including the substance of the AML’s agreements provisions (such as vertical restraints in the automotive industry) as well as procedural arrangements (such as leniency applications).

In any event, the release of the Draft for public comment is likely just the first step of a series of normative efforts we expect the Chinese authorities to undertake in the coming months.

European Commission publishes factsheet on medical devices and in vitro medical devices for non-EU and non-EEA competent authorities


The European Commission has published a factsheet addressed to competent authorities of third countries. This factsheet is one of several guidance documents published by the European Commission to clarify points and answer questions regarding the implications of the Medical Device Regulation (MDR) and the In Vitro Medical Device Regulation (IVDR).

The factsheet is intended to facilitate the import into the EU and export of medical devices from the EU during the transition period.

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Updated UK “no deal” Brexit guidance on medicines, medical devices and clinical trials

The UK Medicines and Healthcare products Regulatory Agency (MHRA) has issued updated guidance on how the UK would regulate medicines, medical devices and clinical trials in the event that the UK leaves the EU on 29 March 2019 with no withdrawal arrangements in place, referred to as a “no deal” scenario.

The guidance updates the MHRA’s technical notice published in August 2018 (see our previous blog on the technical notice) and takes into account the responses to the public consultation in October 2018 on the changes that would be necessary to current UK legislation in the event of a no deal Brexit (see our previous blog on the consultation).

The updated guidance is broadly consistent with the previous position but provides additional details and confirmation on aspects such as the process and timing of marketing authorisation assessments, to help businesses prepare for a possible “no deal”. As well as setting out the key regulatory arrangements that the UK would put in place in the event of a “no deal”, it is noticeable that the updated guidance no longer describes a “no deal” scenario as “unlikely” and instead states that “It has always been the case that as we get nearer to that date, preparations for a no deal scenario would have to be accelerated. We must ensure plans are in place should they need to be relied upon.”

The guidance confirms that in the event of “no deal”, the UK would no longer participate in the EU regulatory networks for medicines or medical devices and the functions currently carried out at EU level for such products on the UK market would be transferred to the MHRA.

The key points in the updated guidance for pharmaceutical and medical device companies are summarised below. Continue Reading

The European Commission started implementing its “no-deal Brexit” Contingency Action Plan


On 19 December 2018, the European Commission published a Communication addressed at the EU institutions. The Communication relates to the preparation for the withdrawal of the United Kingdom from the European Union, in case of a “no-deal” Brexit. The Communication discussed 14 measures that the European Commission has adopted to prepare for the “no-deal” Brexit scenario.

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Likely FDA Impact of the Government Shutdown: Regulatory Submission Reviews, Inspections, and Research Projects

The U.S. government shutdown that began December 22, 2018 affected only about a quarter of federal agencies, because most had already been funded for FY 2019.  Unfortunately, FDA is one of the agencies with at least some functions shut down, as was announced yesterday.  Among other things, FDA has furloughed 42% of its employees, according to a tweet from Commissioner Scott Gottlieb, M.D.  Nonetheless, Dr. Gottlieb said the agency would be “continuing vital activities, to the extent permitted by the law, that are critical to ensuring public health and safety in the United States,” including: Continue Reading

Small Business Runway Extension Act of 2018 Becomes Law: Increases Revenue Look-back Period to Five Years for Small Business Size Eligibility Determinations

On December 17, 2018, the Small Business Runway Extension Act of 2018 (“Act”) (H.R. 6330) was passed by President Trump into law. The new law amends the Small Business Act at 15 USC 632 to require that the size of a federal contractor for purposes of determining small business eligibility be measured based on the average of five years rather than three years of annual revenue. Ultimately, this increase in the Small Business Administration (“SBA”)’s look-back revenue period will allow more small businesses to qualify as “small” for federal contracting purposes for a longer period of time.

How does a federal contractor’s revenue impact its small business eligibility?

Under the Small Business Act, in order to qualify as a small business, Continue Reading

Appetite for anti-unfair competition action in the Internet space

It’s been almost a year since the new “Internet clause” in China’s Anti-Unfair Competition Law (AUCL) is in force. The enforcement authority hasn’t used it much in 2018. But one decision is noteworthy.

AUCL amendment

On 1 January 2018, the first amendment to the AUCL since its enactment in 1993 came into effect. One of the major changes it brought was the addition of a new “Internet clause.” Article 12 of the amended AUCL prohibits the use of technological means to obstruct or disrupt the regular operations of online competitors, and lists several examples of unfair competition practices. Continue Reading