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Navigating distressed M&A
Investors and advisers have been poised for a flood of distressed M&A transactions since the early days of the pandemic.
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Global | Publication | February 2016
On November 13, 2015, the US Food and Drug Administration (FDA) issued a final rule establishing a voluntary program for the accreditation of thirdparty certification bodies to conduct food safety audits and to certify that foreign food facilities and the food they produce comply with FDA food safety requirements. According to the FDA, foreign entities may use certification for two purposes:
The final rule establishes the framework, procedures, and requirements for accreditation bodies seeking recognition by the FDA as well as establishes the requirements for third-party certification bodies seeking accreditation under the program. Both foreign governments and private third parties can qualify as either an accreditation or certification body under the program.
Recognized accreditation bodies will be responsible for accrediting third-party certification bodies to audit foreign food facilities and to certify that the food they produce complies with FDA food safety regulations. The program does not intend for the FDA to directly accredit third-party certification bodies; but does allow the FDA to do so if it has not identified and recognized an accreditation body within two years of the program. Third-party certification bodies accredited under the program are required ‘to perform unannounced facility audits and to notify the FDA upon discovering a condition that could cause or contribute to a serious risk to public health.’
Additionally, the rule provides that facilities and importers may choose to use onsite audits conducted by accredited third-party certification bodies to comply with supplier verification requirements under FDA’s recently-released final rules for Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Human Food and Animal Food, and the Foreign Supplier Verification Programs (FSVP) for Importers of Food for Humans and Animals. Under those rules, in circumstances where an onsite audit is the appropriate supplier verification activity, such audit must be conducted by a ‘qualified auditor,’ which is defined to include an audit agent of a certification body that has been accredited in accordance with the final rule.
Notably, the final rule excludes from the mandatory import certification authority (1) alcoholic beverages manufactured by foreign facilities, and (2) meat, poultry and egg products that are subject to U.S. Department of Agriculture oversight at the time of importation.
The FDA has not yet set an implementation date for the accredited third-party certification program. The FDA still needs to finalize the Model Accreditation Standards guidance and a rule proposed earlier this year establishing user fees for accredited third-party certification bodies. FSMA requires that the FDA establish a user-fee program to reimburse the agency for its work in establishing and administering the third-party certification program.
Food companies with international supply chains should start to familiarize themselves with this program. Once in effect, the FDA can require importers of certain ‘high risk’ foods to obtain certification from a third-party accredited under this new program in order to import these ‘high risk’ foods to U.S.
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Rising interest rates, long-lasting inflation, supply chain uncertainty, regulatory changes, pressure for business transformation, geopolitical instability, economists predicting a global recession – dealmakers are increasingly confronted with extremely challenging conditions that affect their M&A-roadmaps.
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