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PRAC MEMBER NEWS

JULY 2008 e-BULLETIN

PRAC MEMBER GATHERINGS MEMBER NEWS

►ALLENDE & BREA Expands IP Department ►DAVIS WRIGHT TREMAINE Adds to Employment & 44th International PRAC Conference - Mumbai Labor Group November 15-18, 2008 ►FRASER MILNER CASGRAIN Hosts Successful Mining Hosted by Mulla & Mulla & Craigie Blunt & Caroe & Money Conference in Mexico City http://www.prac.org/events.php ►GIDE LOYRETTE NOUEL Boosts U.S. International

Capital Markets Practice With New Arrival ►HOGAN & HARTSON To Open Abu Dhabi Office ►LUCE FORWARD Announces New Climate Change and Sustainable Technology Practice PRAC MEMBER DEALS MAKING NEWS COUNTRY ROUNDUPS ► ALLENDE & BREA Acts for Agropur in 50% Acquisition of La Lecto ►AUSTRALIA CLAYTON UTZ Federal Government to Assume Responsibility for Regulation of All Consumer ► BAKER BOTTS’ Representation of Elan Results in Jury Award of $55.2 Million in

Credit Nanotech Patent Infringement Case

► CAREY Y CIA Acts for Public Service Enterprise Group (“PSEG”) in $1.3billion ►CHILE CAREY Y CIA Netting of Obligations Under Sale of SAESA Group to Ontario Teacher’s Pension Plan/Morgan Stanley Master Financial Derivatives Agreement Consortium

►CHINA KING & WOOD Forum Shopping In China: ► FRASER MILNER CASGRAIN Acts as Canadian Counsel to Petro-Canada CIE TAC vs. UNCITRAL Issuance US $1.5billion of Senior Notes

► GIDE LOYRETTE NOUEL London & Paris Advise on €700Million MTN Issue for ►NETHERLANDS - NAUTADUTILH - Energy Unbundling GE Capital FCC Securitisation Act– Committee Publishes Recommendations to Public Shareholders of Energy Companies ► HOGAN & HARTSON Advises MySpace in Landmark Music Venture

►NEW ZEALAND SIMPSON GRIERSON - Competition ► LOVELLS Acts on Hong Kong’s First Real Estate IPO in 2008

Law Update M&A—Can Vendors in Acquisitions Be ► LUCE FORWARD Attorneys Successfully Represent Blackwater Liable for Breaches of the Commerce Act? ►NAUTADUTILH Advises Deutsche Bank in Partial Acquisition of ABN AMRO ►TAIWAN LEE & LI Draft Amendments to Soil and Groundwater Pollution Remediation ► RODYK Acts in Ford Motor Subsidiaries Sale to Tata Motors

► TOZZINIFREIRE Acts for GE Energy in Sale to Austrian Engineering Group ►THAILAND TILLEKE & GIBBINS Market Dominance

Under the Competition Law ► WILMERHALE False Claims Act Verdict Results in $90Million Award

►UNITED STATES DAVIS WRIGHT TREMAINE DEA Erects a Check-Point on the Road to e-Prescribing

►UNITED STATES HOGAN & HARTSON PhRMA PRAC TOOLS TO USE Amends Guidelines for Interactions with Health Care Professionals • PRAC Contact Matrix ▐ PRAC Member Directory

• International Expert System (sample forms) ▐ Conferences & Events ►UNITED STATES MORGAN LEWIS Ninth Circuit

Ruling—Text Messages Shielded from Employer Review Visit us online at www.prac.org

PRAC MEMBER NEWS Page 2

ALLENDE & BREA DAVIS WRIGHT TREMAINE EXPANDS IP DEPARTMENT ADDS TO LABOR & EMPLOYMENT PRACTICE

Pablo Andrés Palazzi has joined Allende & Brea’s IP FOR IMMEDIATE RELEASE department. Palazzi graduated from Argentine Catholic University and obtained his LL.M. from the University of Summer Stinson Joins Davis Wright Tremaine’s Employment Fordham (cum laude). He specializes in data protection, Law Practice privacy, computer, intellectual and industrial property law, as SEATTLE, July 11, 2008 – Davis Wright Tremaine LLP well as advising national and international companies. announced today that Summer Stinson has joined the Seattle office as an associate in its Labor and Employment Law practice

group. Stinson has experience defending and counseling Palazzi is the Director of the LLM program in Business Law at employers on a variety of matters, including harassment and the University of San Andrés and teaches Intellectual Property discrimination, hiring and retention, medical and family leave, Law and e-commerce at Austral University Law School, where wage and hour laws, and traditional labor laws. he is a member of the Center for Intellectual Property. Prior to entering private practice in 2004, Stinson spent time in human resource management in New York and San Francisco.

Prior to joining Allende & Brea, Palazzi worked as a law clerk in “We're thrilled Summer is joining us,” said Lawton Humphrey, the Supreme Court of Argentina, as foreign associate at chair of the firm's Labor and Employment Law practice group. Morrison & Foerster LLP in New York and in two other “Summer's background in human resources, coupled with her Argentine law firms. employment litigation experience, will allow her to provide our clients with practical and effective advice and to be an invaluable

member of our team.” He co-authored the Data Protection Bill of the City of Buenos Stinson obtained her J.D. from the University of Oregon School Aires (currently law 1845) and its Regulations, the draft on of Law in 2003 and a B.S. in liberal studies from Oregon State Arbitration Rules for domain names in the ccTLD for Argentina University. She previously practiced at Karr Tuttle Campbell and and he has been actively involved in the passage of the Paul, Hastings, Janofsky & Walker LLP. Stinson is licensed to computer crimes law (law 26.388). He has collaborated in practice in Washington and California. representing the Ministry of the Economy in the drafting of the digital signature bill and the data protection act of Argentina and About Davis Wright Tremaine LLP its regulations. Davis Wright Tremaine LLP is a national business and litigation law firm with approximately 500 attorneys in nine offices: Seattle

and Bellevue (Wash.), Portland (Ore.), Los Angeles, San He has written six books, many chapters in international publi- Francisco, New York, Washington, D.C., Anchorage (Alaska) cations, and several articles exploring technology and subjects and Shanghai, China. relating to IP law. He is a member of the Association of Privacy

Professionals and is fluent in English, Italian and French. For additional information visit www.dwt.com

For additional information visit www.allendebrea.com.ar

PRAC MEMBER NEWS Page 3

FRASER MILNER CASGRAIN HOSTS SUCCESSFUL MINING & MONEY CONFERENCE IN MEXICO CITY

July 11 2008 - Mexico

On June 24th, 2008, Fraser Milner Casgrain LLP (FMC), in conjunction with Sedna-Serficor, a leading Mexican investment banking firm, presented at a day-long conference in Mexico City to Mexican mining companies with interests in dual-listings on the Toronto Stock Exchange (TSX). With high-level participation from the TSX, this was the first formal TSX event in Mexico aimed at promoting a better understanding of the opportunities offered by the TSX and the Canadian capital markets. Deloitte and Canaccord Adams, who co-sponsored the event, also presented.

The event, entitled Mining & Money: TSX – A Global Resource for Capital, was open to middle to upper level officials of Mexi- can mining companies, as well as specialized lawyers, accountants, investment bankers and consultants. How to list shares in Canada was top of the agenda for a one day seminar at which Michael Melanson and Sander Grieve presented, "Harnessing the Potential of the Canadian Capital Markets". Rob Fotheringham, Senior Vice-President of Trading, and Janis Koyanagi, Di- rector of Business Development & Strategy at the TSX, demonstrated the unique TSX value proposition as a platform for growth capital for mining companies.

The Honourable Eduardo Sojo, Mexican Secretary of Economy, and the Honourable Norberto Roque, Mexican Under Secre- tary of Mining spoke at the conference, where they expressed their support for the initiative — highlighting that both countries share a long, proud history of mining, and that the sector continues to be a driving force behind both economies today. The keynote speaker at the luncheon was FMC client, Robert R. McEwen, the founder of Goldcorp Inc. and the CEO of US Gold Corporation.

Guillermo Rishchynski, Canadian Ambassador to Mexico also attended the session, recognising FMC’s commitment to creating opportunities in Canada for Mexican mining companies, and reinforcing efforts to build bridges between the two countries.

Along with Ministers, government officials and embassy representatives, attendees included high level executives from Gru- poMexico, Scotia Capital, ABN AMRO Bank and Southern Copper.

FMC’s leading role in holding this event is part of a broader Mexico initiative by the firm and demonstrates FMC’s strong com- mitment to its growing practice in Mexico and other Latin American countries. As the only non-Mexican law firm member of the Camara Minera de Mexico (Mining Chamber of Mexico), the country’s leading industry group for mining, FMC is well-positioned to offer its mining expertise and experience to Mexican mining companies.

"The TSX is the premier stock exchange in the world for mining companies, competing with stock exchanges in London and New York," says Ralph Cuervo-Lorens, Partner, FMC Toronto. "FMC has extensive experience in mining, as well as an interna- tional focus and a strong relationship with the TSX. FMC, together with its partners, seeks to assist mining companies in Mex- ico, one of the most promising mining jurisdictions in the world, to capitalize on the strong natural resource markets at home and abroad."

Often viewed as the gateway to South America, Mexico offers unique investment opportunities. As a member of NAFTA, Mex- ico is a de facto bridge for Canada and the United States to South America through eight trade agreements with various Latin American countries.

For additional information visit www.fmc-law.com

PRAC MEMBER NEWS Page 4

GIDE LOYRETTE NOUEL BOOSTS US INTERNATIONAL CAPITAL MARKETS PRACTICE

10 July 2008

Gide Loyrette Nouel is growing its U.S. international capital markets practice with the arrival of Melinda Stege Arsouze at its Paris office.

Xavier de Kergommeaux, Managing Partner and member of the Finance Department, said "We are very excited about Melinda joining our Paris office. Her arrival will strongly contribute to the development of our international capital markets practice and demonstrates our commitment to strengthening this practice worldwide. In particular, Melinda's arrival will improve our ability to service our issuer and banking clients, both in Paris and worldwide, by further strengthening the U.S. capability of our integrated capital markets platform, already firmly anchored in London and New York".

Melinda previously spent over eight years with Shearman & Sterling in Paris and New York, where her practice focused primarily on capital markets. She has advised on the U.S. aspects of numerous major cross-border securities offerings by European issuers. A member of the New York bar, Melinda obtained her law degree from Columbia University School of Law in 1999.

Fluent in French and English, Melinda will be based out of Gide Loyrette Nouel's head office in Paris, from which she will liaise with the firm's international network of offices, enhancing the firm's ability to respond to its clients' needs for cross-border capital markets advice.

For additional information visit www.gide.com

CAREY Y CIA PARTNER ANNOUNCEMENTS

Recently, Carey y Cia announced partner appointments for Attorneys Jessica Power and Alex Fischer . Jessica graduated from Universidad de Chile. Alex also graduated from Universidad de Chile and received his LL.M from the New York University Law School. Both Jessica and Alex are with the Tax Group of Carey y Cia. and are experts in corporate and personal tax planning, local and international tax consulting, mergers and acquisitions and foreign investment.

For additional information visit www.carey.cl

PRAC MEMBER NEWS Page 5

HOGAN & HARTSON TO OPEN ABU DHABI OFFICE BOOSTING FIRM’S MIDDLE EAST PRACTICE

WASHINGTON, D.C., July 1, 2008 — Hogan & Hartson LLP announced today that it is opening an office in Abu Dhabi, the capital of the United Arab Emirates. The Abu Dhabi Executive Council recently approved Hogan & Hartson’s application to open a law firm office in the emirate. The Abu Dhabi office will be Hogan & Hart- son's first office in the Middle East.

The firm plans to open the office on August 1, 2008, bringing its total number of offices worldwide to 25, spanning the United States, Europe, Asia, Latin America, and the Middle East.

The Abu Dhabi office will add depth to the firm’s existing global capabilities in several areas, including:

Energy Mergers and Acquisitions International Trade Infrastructure Renewable and Alternative Energy Project Finance International Business Transactions Private Equity Hotel Development Telecommunications, Media, and Entertainment Intellectual Property Construction and Finance Aerospace, Aviation, and Transportation Investments Education, among others

Hogan & Hartson partner Ray Batla will reside in Abu Dhabi and serve as Managing Partner of the new office. Batla, who previously served as Managing Partner of the firm’s international offices and as a member of the firm’s executive committee, focuses his practice on project finance, mergers and acquisitions, and energy and infrastructure matters.

Also relocating to Abu Dhabi will be partners Jay Gede and Sean Harrison. Gede, currently resident in the firm’s Baltimore office, focuses his practice on renewable and alternative energy, project finance, and construction matters. Harrison, currently resident in the firm’s London office, has extensive experience in mergers and acquisitions, oil and gas, port and infrastructure development, hotel development, and the hospitality industry. Several associates will relocate in the coming months from the firm’s London and U.S. offices.

In addition, some of the firm’s key partners with Middle East practices will work extensively in Abu Dhabi to support the practice there, including Mark Mazo (Chair of the international business transactions group) and Bruce Parmley (Chair of the real estate, hospitality, and lodging group).

“We have been representing clients active in the Middle East for more than 25 years,” said J. Warren Gorrell, Jr., Chairman of Hogan & Hartson. “We have been increasingly focused on this region and this move further demonstrates our commitment to the Middle East practice and the clients we serve in this part of the world. We were particularly impressed by the vision displayed by the leaders of the Abu Dhabi government and business community, and by the opportunity to work with them in bringing forward their ambitious projects. Much of the extensive investment activity centered there, both inbound and outbound, focuses on industry sectors and practice areas that are traditional strengths of Hogan & Hartson. These are areas where we can add value in the market through our experience and global reach.”

The firm’s Middle East practice has more than 50 lawyers who focus on meeting the needs of clients involved in in-bound and out-bound transactions concerning the Middle East, Europe, the United States, Asia, and Latin America.

About Hogan & Hartson Hogan & Hartson is an international law firm founded in Washington, D.C. with more than 1,100 lawyers in 25 offices worldwide.

In addition to Abu Dhabi, Hogan & Hartson has offices in Baltimore, Beijing, Berlin, Boulder, Brussels, Caracas, Colorado Springs, Denver, Geneva, Hong Kong, Houston, London, Los Angeles, Miami, Moscow, Munich, New York, Northern Virginia, Paris, Philadelphia, Shanghai, Tokyo, Warsaw, and Washington, D.C.

For more information about the firm, visit www.hhlaw.com.

PRAC MEMBER NEWS Page 6

LUCE FORWARD ANNOUNCES NEW CLIMATE CHANGE & SUSTAINABLE TECHNOLOGY PRACTICE

California law firm draws from different practice areas to provide comprehensive legal advice on global warming-related laws and regulations

SAN DIEGO (June 18, 2008) – Luce, Forward, Hamilton & Scripps LLP, a California law firm with offices in San Diego, Los Angeles, Orange County and San Francisco, today announced the formation of a new Climate Change and Sustainable Technology Practice. The formation of this practice will allow the firm to provide comprehensive support to clients in a variety of California industries in matters related to climate change legislation and greenhouse gas emissions reduction regulation.

This interdisciplinary group consists of attorneys from the corporate, environmental/energy, insurance, intellectual property, land use, litigation and real estate practice groups. It will help the firm’s clients anticipate and navigate the maze of new regulations and courtroom challenges that have surfaced and that will continue to challenge businesses as global warming issues become increasingly prevalent.

“We have clients that are starting to deal with global warming issues, and we are also educating and advising clients in this same area,” said Suzanne Badawi, who leads the new Climate Change and Sustainable Technology Practice. “Eventually, every industry is going to be impacted by global warming laws and regulations. We felt that many businesses could benefit from our direct experience and knowledge with these issues.”

In addition to assisting companies comply with global warming-related legislation, the new practice group will also serve California’s clean, green and environmental industries.

“As Luce Forward continues to spread throughout the state of California, we are also offering new practice areas to better suit our clients and address their needs,” said Robert J. Bell, Luce Forward’s managing partner. “The attorneys in this new group have unique experiences with either climate change or green legislation, and their knowledge is best utilized through the formation of the Climate Change and Sustainable Technology Practice.”

The Luce Forward attorneys in the Climate Change and Sustainable Technology Practice are experienced in current climate change issues and provide strategic legal advice to clients on the current state of law, what new cases will impact exposure, and how to best prepare as new laws are enacted and implemented. They are also involved in various “green” activities, more specifically:

Badawi, a partner in the firm’s Los Angeles office, recently wrote an article about global warming insurance coverage issues pertaining to greenhouse gas emitters titled, “Global Warming, Are You Covered?” She will also be speaking at a similar seminar later this year.

John Leslie, a partner in the Del Mar/Carmel Valley office, represents energy companies in matters related to compliance with renewable energy standards and greenhouse gas emissions reduction regulations.

Ariel Bedell, an associate in the San Diego office, is one of the few attorneys nationwide who is certified as a Leadership in Energy and Environmental Design Accredited Professional (LEED AP) by the U.S. Green Building Council.

Eric Lane, an associate in the Del Mar/Carmel Valley office, writes a blog dedicated to the discussion and analysis of intellectual property issues in clean technology at www.greenpatentblog.com.

Michelle Sugihara, an associate in the Los Angeles office, is on the Building Industry Association’s Green Building Task Force.

Founded in 1873, Luce, Forward, Hamilton & Scripps LLP is a full-service California law firm with offices in Rancho Santa Fe, San Diego, San Fran- cisco, Carmel Valley/Del Mar, Los Angeles and Orange County. For more information, visit www.luce.com

PRAC MEMBER NEWS Page 7

ALLENDE & BREA BAKER BOTTS ACTS FOR AGROPUR IN 50% ACQUISITION OF REPRESENTATION OF ELAN RESULTS IN $55.2 MIL- LA LECTO SA FROM ADECOAGRO LION IN NANOTECH PATENT INFRINGEMENT CASE

Earlier this year, Partner Pablo G. Louge and associate Raúl HOUSTON, June 19, 2008 -- A Delaware district court jury Fratantoni worked on this transaction . Agropur, the largest awarded Elan Pharma International Limited ("Elan") $55.2 million Canadian dairy company, acquired 50% of La Lacteo S.A. from in damages from Abraxis BioScience, Inc. ("Abraxis") on June 13 AdecoAgro, as well as the creation of a joint venture for other in a hotly contested patent infringement lawsuit led by a team of ventures. lawyers from Baker Botts L.L.P.

For additional information visit www.allendebrea.com.ar Baker Botts L.L.P. and Ashby-Geddes represented Elan in the first nanotechnology patent case taken to jury trial.

The dispute involved Elan's '363 and '025 Patents. Elan's '363 Patent claims nanoparticles consisting essentially of a crystalline CAREY Y CIA medicament and a non-crosslinked surface modifier adsorbed on ACTS FOR PUBLIC SERVICE ENTERPRISE GROUP the surface thereof. The '025 Patent claims a method for (“PSEG”) IN $1.3 BILLION SALE OF SAESA GROUP TO ONTARIO TEACHER’S PENSION/MORGAN STANLEY- administering the surface-modified nanoparticles. CONSORTIUM

During the trial, Baker Botts lawyers representing Elan initially

accused Abraxis of infringing both patents by making, offering to

sell and/or selling Abraxane®, an FDA-approved drug for the Ontario Teachers' Pension Plan (OTPP) formed a consortium treatment of metastatic breast cancer. The '025 Patent claim of with Morgan Stanley's infrastructure unit to acquire the SAESA infringement was dropped following a court order construing its Group of Companies in southern Chile from Newark-based claims. Abraxis, represented by Morrison & Foerster, Public Service Enterprise Group (PSEG) for $1.3 billion. The counterclaimed that both the '363 and '025 Patents were invalid consortium will pay $870 million in cash for SAESA, a Chilean and unenforceable. Abraxis argued that it did not infringe the power distributor, and assume more than $400 million in debt. ‘363 Patent, contending that the nanoparticles in Abraxane® contain an amorphous medicament and a cross-linked surface Carey y Cia. M&A partner and antitrust chair Claudio Lizana modifier. and tax cohead Jessica Power Roca served as PSEG's Chilean counsel. Following an eight-day trial and approximately 12 hours of deliberation, the jury awarded Elan $55.2 million in damages for For additional information visit www.carey.cl Abraxis's past infringement based upon a reasonable royalty rate of 6%. The jury also found that both the '363 and '025 Patents

are valid and enforceable.

###

About Baker Botts L.L.P. Baker Botts L.L.P., founded in 1840, is a leading international law firm with offices in Austin, Beijing, Dallas, Dubai, Hong Kong, Houston, London, Moscow, New York, Palo Alto, Riyadh and Washington. With approximately 750 lawyers, Baker Botts provides a full range of legal services to regional, national and international clients.

For more information, please visit www.bakerbotts.com.

PRAC MEMBER NEWS Page 8

FRASER MILNER CASGRAIN LLP ACTS AS CANADIAN COUNSEL TO PETRO-CANADA ISSUANCE US $1.5BILLION OF SENIOR NOTES

On May 15, 2008, Petro-Canada completed an offering in the United States of US$600 million of 6.05% senior notes due May 15, 2018 and US$900 million of 6.80% senior notes due May 15, 2038. The notes were issued pursuant to a base shelf prospectus dated March 31, 2008, which provides for the issuance of up to US$4 billion of debt securities of Petro-Canada.

Petro-Canada is one of Canada's largest oil and gas companies, operating in both the upstream and downstream sectors of the industry in Canada and internationally.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and HSBC Securities (USA) Inc. acted as joint book-running managers of the offering, with a syndicate that included BMO Capital Markets Corp., BNP PARIBAS Securities Corp., Banc of America Securities LLC, CIBC World Markets Corp., Greenwich Capital Markets, Inc., J.P. Morgan Securities Inc., Mitsubishi UFJ Securities International plc, RBC Capital Markets Corporation, Scotia Capital (USA) Inc. and TD Securities (USA) LLC.

The Fraser Milner Casgrain LLP team included Bill Jenkins, Stephanie Campbell, Toby Allan and Keith Inman (corporate), Alex MacWilliam (environmental) and Derek Kurrant (tax).

For additional information visit www.fmc-law.com

GIDE LOYRETTE NOUEL LONDON & PARIS ADVISE ON €700 MILLION MTN ISSUE FOR GE CAPITAL FCC SECURITISATION

30 June 2008 - Gide Loyrette Nouel London and Paris offices have advised GE Capital Corporation (GECC) on its €700 million MTN issue of Guaranteed Floating Rate Notes. The notes - rated AAA/Aaa and maturing in June 2010 - were issued by GE Capital FCC (Fonds Commun de Créances), a French SPV. GECC guaranteed the notes. The Notes were listed on the Luxembourg Stock Exchange on 19 June and were fully placed prior to the listing.

BNP Paribas, HSBC and Morgan Stanley were the Lead Managers.

Gide advised on both the French and New York law aspects of the transaction. A team in Paris led by Gide’s managing partner Xavier de Kergommeaux dealt with the FCC regulatory issues. Scott Cameron, a US qualified lawyer, and his team in Gide London drafted the prospectus, advised on the guarantee and managed the listing.

Gide is European counsel for GECC’s Euro MTN programme. In the first quarter of 2008, Gide was ranked by Thomson Reuters as the 2nd law firm in Europe for international debt transactions (based on total value and number of deals) ahead of all UK rivals.

Xavier de Kergommeaux, Gide’s Paris-based managing partner said: “Gide’s strategy for opening a London office was simple: to bring English, US and French capital markets and finance capability into one integrated platform and provide comprehensive capital markets experience and expertise in the most widely used legal regimes. This transaction is exactly the type of work we had in mind and explains how Gide London has grown to become one of the largest specialist finance practices in the UK.”

Scott Cameron, head of Gide London’s debt capital markets practice, added: “From drafting the prospectus and related transaction documents, to dealing with the CSSF (the Luxembourg regulators) this transaction demonstrates how effectively Gide’s London and Paris debt teams work together.”

For additional information visit www.gide.com

PRAC MEMBER NEWS Page 9

HOGAN & HARTSON LLP ADVISES MYSPACE IN LANDMARK MUSIC VENTURE

NEW YORK and LOS ANGELES, April 4, 2008 – Hogan & Hartson LLP represented News Corporation’s MySpace in a landmark joint venture with three major music labels, SONY BMG MUSIC ENTERTAINMENT, Universal Music Group, and Warner Music Group, to create MySpace Music.

The new company, described as a “fully integrated 360 degree global music solution,” will allow users to purchase music to download to any portable digital music player, and will provide a platform for e-commerce offerings such as merchandise and ticket sales. In addition, the labels’ artists will be able to provide their fans with digital downloads, mobile ringtones, short messaging service (SMS), and other products from their MySpace profiles.

MySpace Music will capitalize on its music community’s 30 million unique monthly users and its more than five million existing artists. Immediately, the new company will be able to leverage the world’s largest library of content to offer unique audio and video content for MySpace users. The company will roll out new content and product functionality in the coming months.

MySpace was represented by a diverse team of Hogan & Hartson lawyers, led by Los Angeles partner Robert Jesuele and New York partner Maureen Hanlon, with assistance from Los Angeles associate Jale Lowery and New York associate Caryn Groce. Other New York partners included Alex Johnson (corporate), Phil Altman (tax), Ira Sheinfeld (tax), and Mark Weinstein (tax). From Washington, D.C., Janet McDavid and Erica Mintzer assisted on antitrust matters and from Northern Virginia, partner Audrey Reed and associate Tarah Grant worked on licensing.

About Hogan & Hartson Hogan & Hartson is an international law firm founded in Washington, D.C. with more than 1,100 lawyers in 22 offices worldwide. The firm has a broad- based national and international practice that cuts across virtually all legal disciplines and industries.

Hogan & Hartson has offices in Baltimore, Beijing, Berlin, Boulder, Brussels, Caracas, Colorado Springs, Denver, Geneva, Hong Kong, London, Los Angeles, Miami, Moscow, Munich, New York, Northern Virginia, Paris, Shanghai, Tokyo, Warsaw, and Washington, D.C.

For additional information visit www.hhlaw.com

44th International PRAC Conference Hosted by Mulla & Mulla & Craigie Blunt & Caroe Early Registration Now Open Open to all PRAC Member Firms Registration available only online at www.prac.org

PRAC MEMBER NEWS Page 10

LOVELLS ACTS ON HONG KONG’S FIRST REAL ESTATE IPO IN 2008

16 June 2008

Lovells has advised on the listing of Central China Real Estate, the first Chinese real estate listing in Hong Kong this year, sponsored by Morgan Stanley The Hong Kong IPO of Central China Real Estate Limited, a leading residential developer in Henan Province in China, raised US$176 million in the first Chinese real estate listing in Hong Kong for more than six months. Central China is issuing 500 million new shares, representing 25% of its share capital.

For almost 15 years, Central China has successfully developed residential properties in Henan Province, in particular targeting customers in the mid- to high-end market. The company has 4.8 million square metres (51.7 million square feet) of properties in 43 projects in 19 cities in Henan for development. Singapore’s CapitaLand, the largest property developer in Southeast Asia and a strategic investor of Central China, holds a 27.1% stake at the time of listing.

The Lovells team was introduced to Central China by Morgan Stanley, sole global coordinator, sponsor and bookrunner, to advise on the IPO. The team was led by partners Jamie Barr and Terence Lau, and included U.S. securities specialist, consultant Thomas Tarala.

Commenting on the deal, Jamie Barr, partner and head of Asia Corporate, said:

“We are delighted to be working with Central China and Morgan Stanley on this successful Hong Kong IPO. This is the second China real estate IPO on which Lovells has worked with Morgan Stanley. The first was Country Garden, which listed on the Hong Kong Stock Exchange in April 2007. This transaction reaffirms our reputation within the real estate sector and more broadly for working with leading investment banks on headline IPOs across the region."

For additional information visit www.lovells.com

LUCE FORWARD ATTORNEYS SUCCESSFULLY REPRESENT BLACKWATER

June 25, 2008

Jeffrey A. Chine and Jennifer La Fond Chavez recently obtained two victories in Federal District Court for their client Blackwater Worldwide against the City of San Diego. Chine and Chavez act as its land use litigation counsel, part of Blackwater’s legal team.

Most recently, an injunction was issued which will allow the company to continue operating its Navy training facility near Brown Field. U.S. District Judge Marilyn Huff found the company is at liberty to continue operations with its current permits, despite City Attorney Michael Aguirre’s assertion that the training facility lacked proper permits.

Prior to the injunction, Chine and Chavez were instrumental in obtaining a temporary restraining order against San Diego which allowed the training facility to open, as scheduled, on June 5.

For additional information visit www.luce.com

PRAC MEMBER NEWS Page 11

NAUTADUTILH TOZZINI FREIRE ADVISES DEUTSCHE BANK IN PARTIAL ACQUISITION ACTS FOR GE ENERGY IN SALE TO AUSTRIAN OF ABN AMRO ENGINEERING GROUP ANDRITZ AG

NautaDutilh is advising Deutsche Bank in the acquisition of TOZZINI FREIRE Acts in Austrian engineering group Andritz AG parts of ABN AMRO currently owned by Fortis. The acquisition acquisition of certain assets of GE Energy’s Hydro business as involves an amount of EUR 709 million. well GE Energy’s majority interest in GE Hydro Inepar do Brasil S.A., to be renamed Andritz Hydro Inepar do Brasil S.A. The sale was a condition imposed on Fortis by the European According to Andritz’s press release: Commission when it took over ABN AMRO and is intended to ensure proper market operation. Fortis believes that it has “The acquired businesses are expected to add approximately complied with that condition through this transaction. 300 million US dollars to Andritz’s Group sales on an annual basis and will be included in the consolidated financial This transaction makes Deutsche Bank the third-largest statements of the Andritz Group from 1 July 2008. provider of business banking in the Netherlands. The These acquisitions further strengthen and expand Andritz’s transaction is expected to be completed in October after which position as one of the world’s leading suppliers of hydropower business operations will continue under the name: Deutsche equipment, and strengthen Andritz’s abilities to serve customers Bank. in Brazil, China, North America and Scandinavia.

The NautaDutilh team that is advising Deutsche Bank during ‘Given the fast growing demand for renewable energies, the this transaction is headed by Leo Groothuis and Geert demand for hydropower, which is by far the most important Raaijmakers. source for electricity production from renewable energy sources, is expected to show very strong growth during the next years. For additional information visit www.nautadutilh.com With these acquisitions, Andritz is now in a position to supply its

customers with the full product range of hydropower equipment worldwide,’ says Friedrich Papst, member of the Executive Board of Andritz and Head of Andritz’s Hydro Power business area.”

TozziniFreire lawyers acting on behalf of Andritz AG were RODYK &DAVIDSON Marcio Baptista – partner; Marta Viegas – partner; and Carolina ACTS FOR FORD MOTOR SUBSIDIARIES SALE TO TATA MOTORS de Souza Andrade Santos – associate

The Stock Purchase Agreement was executed June 28, 2008

Rodyk acted for Ford Motor Company in the sale of its For additional information visit www.tozzinifreire.com.br subsidiaries, Land Rover and Jaguar Cars Limited, to Tata

Motors Limited of India in a deal worth US$2.3 billion. Partner S. Sivanesan led this matter assisted by associates Gordon Sng and Mark Tay.

For additional information visit www.rodyk.com

PRAC MEMBER NEWS Page 12

WILMERHALE FALSE CLAIMS ACT VERDICT RESULTS IN $90MILLION AWARD

June 27, 2008

Upholding a May 2007 jury verdict of liability under the False Claims Act and a $90 million damage award, on June 23 the Chief Judge of the US District Court for the District of Columbia denied all post-trial motions filed by the defendant construction companies accused of conspiring to rig bids on US government-funded construction projects in the Middle East. The ruling represents a victory for both the United States and WilmerHale's client, Relator Richard F. Miller. Miller, a former executive of one of the construction companies, alerted the Government after becoming aware of the companies’ conspiracy. The jury verdict followed a seven-week trial.

The WilmerHale team was led by members of the Antitrust and Litigation practices, including partners Robert Bell, Jonathan Cedarbaum, Robert Cultice (lead trial attorney), Jennifer O’Connor (lead trial attorney), counsel Jeffrey Ayer, and associates Ashley Baynham, Monya Bunch, Kevin Heffel, Allison Murphy, Gregory Reece, Brian Simmonds, Stephen Smith and Daniel Volchok.

For additional information visit www.wilmerhale.com

PRAC Conference Materials Available online at www.prac.org

SEOUL 2007 October 20-24

PRAC e-Bulletin is published monthly. Member Firms are encouraged to contribute articles for future consideration. Send to [email protected]. Deadline is 10th of each month.

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alert 04 July 2008

Federal Government to assume responsibility for regulation of all consumer credit

The Council of Australian Governments ("COAG") yesterday agreed that the Federal Government would assume responsibility for regulation of all consumer credit. This closes the debate as to whether federal regulation in the area would be limited to mortgage lending and related matters. The decision was made two days after submissions closed in relation to the Green Paper issued by Treasury in June where federal regulation of all consumer credit was raised as an option. Consumer credit includes personal loans, credit cards, payday lending and micro loans.

Nick Sherry, Minister for Superannuation and Corporate Law, in announcing this decision described the current consumer credit regulation as "duplicated, patchy, very hard to change or even non-existent" which "does very little to protect Australians, whilst imposing unnecessary red tape on business". He indicated that the new regulatory structure would include "simple, standard national regulation, replacing regulation in 6 states and 2 territories".

The Business Regulation and Competition Working Group of COAG is to report to COAG in October 2008 with a detailed Implementation Plan.

We understand that over the next few months, consideration will be given as to which of the following broad approaches to be adopted:

z including consumer credit regulation within the framework of the existing financial services regulation under the Corporations Act; or z regulating consumer credit consistently with its current regulation under the Uniform Consumer Credit Code but with changes aimed making the nature of this regulation and, in particular, disclosures more simplified and meaningful.

However, irrespective of the approach that is adopted, it seems clear that all credit providers will be required to be subject to an Alternative Dispute Resolution Scheme.

Additionally, COAG agreed that the Federal Government would assume responsibility for regulating mortgage broking, trustee companies, non bank lenders and margin loans. No details of how this regulation would work were released, but various proposals were canvassed in the June Treasury Green Paper.

Disclaimer Clayton Utz News Alert is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states.

For more information please contact:

Name: Steven Klimt - Partner Sydney Name: Narelle Smythe - Partner Sydney Tel: +61 2 9353 4133 Tel: +61 2 9353 4220 Fax: +61 2 8220 6700 Fax: +61 2 8220 6700 Email: [email protected] Email: [email protected] Page 2 of 2.

Name: Randal Dennings - Partner Brisbane, Sydney Name: Mark Sneddon - Partner Melbourne Tel: +61 7 3292 7017 (Brisbane), +61 2 Tel: +61 3 9286 6353 9353 5155 (Sydney) Fax: +61 3 9629 8488 Fax: +61 7 3221 9669, +61 (0) 408 878 711 (Mobile) Email: [email protected] Email: [email protected]

Newsletter No 23 / June 2008



In that resolution, the Central Bank Board recognized the following FEATURE ARTICLES master agreements for the purposes of Art. 69 of the Bankruptcy Law:

(i) 1992 International Swap Derivatives Association, Inc, Master Netting Of Obligations Under Master Agreements, in their “Local Currency-Single Jurisdiction” and “Multicurrency-Cross Border” modes, as well as the 2002 ISDA Financial Derivatives Agreements Master Agreement; and

(ii) the modification, adaptation, replacement or supplement of any Elena Yubero ([email protected]) of the aforementioned master agreements, agreed by the pertinent instances and according to the applicable laws, regulations and Article 69 of the Bankruptcy Law provides that adjudication in procedures, only to the extent related to the changes or adjust- bankruptcy precludes any netting that would not have been appli- ments that said agreements include wit regard to netting in case of cable previously by mere operation of law between the reciprocal bankruptcy re. derivatives transactions. obligations of the bankrupt party and creditors, except in the case of related obligations arising under one and the same contract or The Resolution expressly states that this recognition: (i) is granted negotiation and even if due on different dates. solely to netting agreements in the bankruptcy cases they contem- plate, and therefore it does not imply under any circumstances an Prior to the enactment of Law 20,190 (MKII), if either party went approval or authorization to conduct certain derivatives operations, bankrupt the status of reciprocal obligations arising under various contracts or instruments, for which purpose the applicable regula- derivatives contracts entered into under the same master agree- tions must be adhered to; (ii) this is limited to the persons who can ment was questionable, since it was unclear whether they could be adjudicated bankrupt, thereby excluding Chilean banks, which or not be deemed as obligations “arising under one and the same are subject to forcible liquidation procedures, notwithstanding its contract or negotiation,” and consequently whether they could be application in case the counterparty is adjudicated bankrupt; and netted or not. (iii) the Central Bank reserves its right to modify or supplement the Resolution in relation to any given master agreement, which This situation changed with Law 20,190, as it introduced the will be effective with regard to derivatives contracts or operations following amendments: (i) Art. 69 of the Bankruptcy law was executed or conducted as from the date of publication of the Reso- amended, providing that related obligations will include that, even lution in the Official Gazette. if in a different currency, arise from derivatives operations, such as futures, options, swaps, forwards or other derivative instru- Finally, the Resolution provides that one may apply to have the ments or contracts between the same parties, on one or several Central Bank recognize any other master agreement in relation to occasions, under Chilean or foreign laws, under the same master persons who may be adjudicated bankrupt, provided that agree- agreement recognized by the Central Bank of Chile that includes ment is generally accepted or applied in the national or interna- a netting agreement in case of bankruptcy or forcible liquidation. tional derivatives markets. In this sense, it as provided that if on of the parties is a bank esta- blished in Chile, netting would only apply in the case of derivatives Notwithstanding the above, one should bear in mind that the above the terms and conditions of which were authorized by the Central rules have only admitted netting for reciprocal obligations arising Bank of Chile; and (ii) the third paragraph of Art. 136 of the Banking from derivatives contracts executed under one and the same mas- Law was amended to allow that, if a creditor is in turn the debtor ter agreement that meets the conditions provided by law, but under of a bank that is under forcible liquidation, the related operations no circumstances does it allow the netting of those obligations with arising from derivatives transactions could be netted. other, different obligations, e.g. obligations under a loan.

On January 23, 2008, the Official Gazette published the resolution The following will be topics for discussion: (i) the inclusion, at a adopted by the Board of the Central Bank of Chile at its regular later stage, of the General Conditions or Derivatives Contracts in meeting held on January 17, 2008 (the “Resolution”), whereby the the Local Market approved by the Chilean Banking and Finance Central Bank of Chile recognized some master derivatives agree- Association; (ii) the exclusion of local banks from an important tool ments for the purpose of netting related obligations between the for the conduct of their financial businesses; and(iii) the sense and same parties in case one of them went bankrupt. scope of the Resolution regarding its effective date, the voluntary early termination of contracts and other topics of interest.

Miraflores 222, Floor 24, 8320198 Santiago, Chile - Phone: (56-2) 365 72 00 Fax: (56-2) 633 19 80 (56-2) 638 49 85

Forum Shopping in China: CIETAC vs. UNCITRAL

By Huang Tao* and Dai Yue**

Lacking knowledge of and exposure to China’s judicial and arbitrational system, foreign companies usually worry about dispute resolution clauses more than any other clause in a contract. Deciding which arbitration tribunal and what arbitration rules to specify becomes a sensitive and important aspect of contract negotiations for wholly foreign owned entities (“WOFE”) and cooperative joint ventures (“CJV”).

I. Choice of Arbitration Tribunal

Contracts in which one party is a foreign entity will contain foreign elements, allowing the parties to choose their jurisdiction without restriction under PRC law. The parties to such a contract may decide at their discretion whether to choose an arbitration tribunal within China or in another country, or resort to ad hoc arbitration to resolve disputes.

A WOFE or CJV established or to be established by a foreign company in China is generally regarded as a Chinese company under PRC law. Therefore, under PRC law, the contracts for the transactions carried out by a WOFE or CJV do not involve any foreign elements. If the contracting parties in a transaction between PRC entities choose a foreign arbitration tribunal, Chinese courts may hold the arbitration clauses in the contract void on the basis that the parties intend to elude PRC law. Therefore, it is recommended that a WOFE or CJV shall appoint a Chinese arbitration tribunal in contracts which do not contain a foreign element.

II. Choice of Arbitration Rules

In most cases, a WOFE or CJV actually appoint a PRC arbitration tribunal (often China International Economic and Trade Arbitration Commission, “CIETAC”) for dispute resolution to comply with PRC law’s and courts’ preference for domestic arbitration tribunals for domestic companies. However, since WOFEs and CJVs may not be familiar with China’s arbitration system, they will often include in the dispute resolution clause of contracts a qualification requiring application of non-Chinese arbitration rules, e.g. United Nations Commission on International Trade Law rules (“UNCITRAL Rules”), under the CIETAC arbitration procedures.

A. Feasibility and Risks of UNCITRAL Rules

Although the arbitration rules of CIETAC (“CIETAC Rules”) empower the parties to choose other arbitration rules for application in CIETAC arbitration proceedings1, cases that actually apply UNCITRAL Rules to CIETAC procedures are rare. Irreconcilable discrepancies exist between the procedural administration systems of UNCITRAL and that of CIETAC, such as in the requirements for appointing an authority to appoint the arbitrators. Often, the parties are required to renegotiate and switch to CIETAC Rules during arbitration proceedings due to the conflict of the UNCITRAL Rules and the CIETAC procedural administration systems. Switching rules mid-arbitration exposes the parties to the risks of delayed or suspended proceedings because of the potential for respondent’s failure to cooperate. Also, after the arbitration proceedings are completed, the respondent may petition the court to revoke the arbitration award on the basis that the arbitration proceedings are questionable.

B. A Comparison of UNCITRAL Rules and CIETAC Rules

1 Article 4 Paragraph 2 of the CIETAC Rules provides that “...the parties may execute such agreement where the parties agree to adopt other arbitration rules or change the corresponding clauses of this Rules, unless such agreement cannot be executed or is in conflict with mandatory regulations of the place of arbitration.”

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Beyond the risks associated with mid-arbitration re-negotiations for applicable rules, a foreign company or its WOFE or CJV, as the claimant, is generally disadvantaged under the UNCITRAL Rules for other reasons, also.

a. Procedure Efficiency

Time Limit The claimant’s best interests lie in an efficient and speedy conclusion of the arbitration proceedings. However, UNCITRAL Rules are relatively lenient with the time limits for procedures and provide no time limit on the rendering of an award, including the final or supplementary award or corrections to an award. CIETAC Rules expressly set forth that an award shall be rendered within six months (four months for domestic arbitration proceedings) from the date of the formation of the arbitration tribunal.

Documents Submission Under UNCITRAL Rules, an arbitration proceeding starts once the claimant submits and delivers the arbitration notice to the respondent. The authorized arbitration tribunal may decide at its discretion on the time limit of submission of the Application for Arbitration, defense and counterclaim. However, UNCITRAL Rules are silent on the time limit for the submission of counterclaims by the defense. Under CIETAC Rules, the time limit to submit an Application for Arbitration, defense and counterclaim is 45 days and for submitting counterclaims by the defense is 30 days. For a domestic arbitration proceeding, both time limits are 20 days.

Constitution of Arbitration Tribunal The procedures of appointing arbitrators provided by UNCITRAL are quite complicated. In general, with UNCITRAL Rules, the appointment process for a sole arbitrator requires approximately three months and for three arbitrators requires approximately five months. This appointment process does not include the time required to determine the appointing authority. The complexity and uncertainty associated with UNCITRAL Rules are likely to result in delays of the arbitration proceedings. Under CIETAC Rules, the appointment process for a sole arbitrator requires approximately 15 days and for three arbitrators requires approximately 30 days (excluding the process of arbitrator appointment by the Chairman of CIETAC).

Duration of the Complete Arbitration Proceedings Under UNCITRAL Rules summary procedures are not an option. But under the CIETAC Rules an award can be rendered within three months through summary procedures.

Through the above analysis, it is obvious that the application of UNCITRAL Rules does not favor the claimant’s desire to accelerate the arbitration process. In fact, UNCITRAL Rules are likely to provide the respondent opportunities to delay the procedures since UNCITRAL’s procedures are complex and allow for extended time limits.

b. Responsibilities of the Parties

Since UNCITRAL Rules were not intended for a specific arbitration tribunal and can also be applied to other entities2, they lack an administrative mechanism. This lack creates an administrative gap when UCITRAL Rules are applied to CIETAC, which must be filled by the parties. For example, the parties are responsible for compliance with various statute of limits and procedural matters (including but not limited to appointing representatives and personnel for assistance, raising objection to the arbitrator, requesting for the witness to appear at court, requiring the arbitration tribunal to make explanations or corrections to an awards rendered) and must ensure the documents (including but not limited to the arbitration notice, application for arbitration and

2 The UNCITRAL Rules also apply to ad hoc arbitration.

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defense) are delivered to the counterparty. If the parties are not experts in administering arbitration proceedings, they risk some fault that may be used by the counterparty as a ground for refusal of the enforcement the award. For this reason, the parties should be very careful about such risks.

c. Flexibility

Under UNCITRAL Rules, the parties have less discretion and less flexibility than under CIETAC Rules. For instance, with CIETAC Rules the president of the arbitration tribunal is appointed through negotiation among the parties. However, under UNCITRAL Rules, the president of the arbitration tribunal shall be appointed by two arbitrators or the appointing authority. Another example is CIETAC Rules protection of the compromise process during the conciliation proceedings from reference in the hearing proceedings, a protection that is not available in UNCITRAL Rules. Also, CIETAC Rules allow the parties to prepare document translations independently, while UNCITRAL Rules require document translations to be arranged exclusively through the arbitration tribunal.

d. Coordination with PRC Law

Some of UNCITRAL Rules are in conflict with PRC law. Therefore, rulings rendered based upon such rules may not be feasible legally in China. For example, UNCITRAL Rules empower the arbitrational tribunal to take interim measures of protection on the subject matter of the dispute. But, in China, such power is exclusively exercised by the Chinese courts.

C. Custom Tailored Exceptions to CIETAC Rules

For all of the reasons stated, it is unnecessary for a WOFE or CJV to replace CIETAC Rules with other rules. Choosing CIETAC Rules are helpful to manage the uncertainty associated with other rules and to lower the risks of revocation of the final award. In addition, a WOFE or CJV may alter the arbitration rules under the arbitration clauses or make special clauses to the extent that CIETAC Rules permit to better protect the parties’ legitimate rights and interests. The parties may include the following alternative clauses in their contract:

a. English is the language to be used in the proceedings; b. The parties may appoint a non-CIETAC arbitrator onto the Panel of Arbitrators3; c. The grounds on which an arbitrator shall withdraw from a hearing shall include inability or failure of arbitrator to perform responsibilities; d. The arbitration tribunal shall hear the case through inquiry or argument and make arrangements for a record of hearing; and e. The expert that the arbitration tribunal consults within China or the expert witness that the arbitration tribunal appoints shall not be an interested party to the case.

However, the special arrangements for or tailored clauses providing exceptions to CIETAC Rules are not accepted where such arrangements or clauses cannot be implemented or are in conflict with the laws of the jurisdiction of arbitration. Although the parties are allowed to tailor CIETAC Rules to cater for their specific transaction, most of the rules do not need to be altered and, in practice, no additional arrangements need to be made.

To minimize a delay in the arbitration process arising from the conflict in arbitration rules and arbitration procedures administration systems and the uncertainty in the result of arbitration, it is recommended that a WOFE or CJV should appoint a PRC arbitration tribunal in the dispute resolution clauses in a contract without foreign elements. Also, a WOFE or CJV may also make changes or additional arrangements to the existing applicable

3 The parties may appoint any person they trust or with certain industry background or professional knowledge as arbitrator.

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arbitration rules to better utilize the administration procedure function and procedural guidance by arbitration tribunals and better protect their legal rights and interests as the respondent.

(This article was originally written in Chinese, the English version is a translation.)

*Huang Tao is a partner of King & Wood’s Litigation & Arbitration Group in Beijing. **Dai Yue is an associate of King & Wood’s Litigation & Arbitration Group in Beijing.

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Committee Kist publishes recommendations to public 3 July 2008 shareholders of energy companies This newsletter is sent from NautaDutilh

Public Shareholdership of Energy Companies Committee, 26 June 2008

As of 1 July 2008, the provisions in the Act on Independent Network Management ("Unbundling Act") containing the prohibition against network companies forming a group with commercial companies ("Group Ban"), has come into force. The Group Ban requires the full separation of vertically integrated energy companies, such as Nuon, Essent, ENECO and Delta. This separation must be implemented before 1 January 2011 and will result in:

• separate commercial companies which engage in the sale, distribution and/or production of energy ("Commercial Energy Companies") and; • separate network companies operating gas and/or electricity networks ("Network Companies").

The implementation of the Group Ban will create the possibility for the local governments that are currently shareholders ("Public Shareholders") in the vertically integrated energy companies to sell (part of) their interest in the Commercial Companies to third parties.

In January 2008, the Minister of Economic Affairs appointed a committee of experts, under the chairmanship of Mr A.W. Kist, to provide the Public Shareholders with expert advice and information to enable them to make sound and strategic choices with regard to a possible sale of shares. The committee is referred to as the Public Shareholdership of Energy Companies Committee, or the Kist Committee ("Committee").

On 26 June 2008, the Committee presented its report entitled 'Public Shareholdership of Energy Companies' to Minister Van der Hoeven. The main recommendations can be summarized as follows:

a. Shareholders should lay down more powers for the general meeting of shareholders in the articles of association of the energy companies so that they are better capable of serving public interests; b. The national government should provide clarity to the local governments (municipalities and provinces) on the financial consequences of the proceeds of a sale of shares in the Commercial Companies. Currently it is unclear whether (part of) these proceeds would - indirectly - accrue to the national government; c. The national government should examine whether it is desirable to impose restrictions or conditions on the acquisition of Commercial Energy Companies by private companies.[1] d. Shareholders should first determine the use to which the proceeds of a possible sale of shares could be put. This purpose should then be weighed against the public interests being served by a continuing shareholdership, ultimately resulting in a decision whether or not to sell the shares; e. Shareholders should assess all consequences of the different options in the unbundling process and potential subsequent sale of shares in the Commercial Energy Companies. In this assessment, the public interest should be the guiding principle, rather than the interest of the management of the energy companies; f. The national government and the local governments should institute a direction group (regiegroep) to investigate the possibilities where a restructuring of the Network Companies could result in a consolidation. After determining the optimal regional spread of the networks, a valuation method and a timeframe for consolidation, the proposal for restructuring should result in three to five Network Companies. In addition, the smaller shareholders should be given an 'exit' opportunity, for example selling their shares in Network Companies to the national government or state-owned transmission system operators (e.g. TenneT or GTS).

Hereafter the recommendations of the Committee are set out in more detail and the current developments with regard to the selling process are briefly mentioned:

I. General recommendations

Recommendations to the national government

1. With regard to the security of supply, the national government should actively work on the streamlining and acceleration of permitting and other procedures pertaining to energy supply investments. 2. TenneT's powers as transmission system operator should be expanded and made more explicit so that it is able to work effectively and perform its statutory duty of guaranteeing the security of electricity supply. 3. To ensure the affordability of the supply of electricity and gas, it is of vital importance that the electricity and gas markets function well. The Committee therefore recommends that the national government work on the integration of national gas and electricity markets in Europe/Northwest Europe and the elimination of regulatory differences (including differences in environmental regulations) between the Netherlands and the surrounding countries, so that a level playing field is created for market parties. 4. To achieve sustainability targets, market parties will have to make major investments that are not immediately profitable. To induce these parties to make such investments, it is necessary to have a coherent and consistent incentive policy that provides sufficient certainty for investors. 5. It should be investigated whether the regulatory and supervisory mechanisms will be sufficient to adequately secure public energy-related interests following the unbundling process, especially bearing in mind the internationalization of the energy sector.

Recommendation to both the national government and the local governments

6. In order to secure public interests with regard to energy, it is desirable that the national government and the local governments remain in, or enter into, consultation with each other on the future of the Dutch energy supply.

Recommendations to the local governments

7. It is recommended that the local governments define which public interests they want to serve with their shareholdership and that they amend their powers (under the articles of association) accordingly. 8. The Committee urges the local governments that are shareholders to use their powers in a consistent and professional manner and, in this regard, to strengthen their mutual collaboration. 9. For decision-making purposes, shareholders should use their rights to information and arrive at a structured and mandatory process of information exchange with the management boards of the energy companies. 10. In the period before the actual unbundling, important decisions will be made with regard to the distribution of assets and employees among both companies. These are decisions that directly affect the shareholders' interests. It is therefore important that the shareholders stay informed of the unbundling plans and use their powers to direct the process.

II. Recommendations concerning Commercial Energy Companies

Recommendation to the national government

11. In connection with the possible sale by the local governments of shareholdings in production and supply companies, it is recommended that the national government provide clarity on the consequences of such sales for the financial relationship between itself and the local governments.

Recommendations to the local governments

12. Provinces and municipalities that are considering the sale of their shares should first determine the use to which the proceeds will be put. After this has been done, the possibility of continuing the shareholdership should then be weighed against the intended use of the proceeds. Proceeds of such sales should not be used for consumptive expenditure. 13. The decision whether or not to sell (all or part of) the shares in energy production and supply companies requires a full assessment of all of the consequences of the different options, including options that have been dismissed. 14. In the event of a decision to sell, shareholders should, in concert with each other and the relevant company, arrive at a controlled selling process so that all interests involved are taken into account. 15. If shareholders decide on a public-private collaboration, it is vital that long-term agreements are made concerning strategy or strategy scenarios, debt/equity ratios and decision-making powers.

Recommendation to the national government

16. The national government should also examine whether it is desirable, from a merger control perspective, to impose specific restrictions or conditions on the acquisition of energy companies.

III. Recommendations concerning Network Companies

Recommendation to the local governments

17. In view of the complexity of the unbundling process, the Committee considers it important that the Network Companies arrive at a strategic plan among themselves and in consultation with TenneT, GTS and the shareholders.

Recommendations to both the national government and the local governments

18. The Committee considers it necessary that the national government consult, whether in a coordinating role or otherwise, with the shareholders of energy companies that are required to unbundle. The purpose of the consultation should be to support these shareholders in giving form to their role in the unbundling process. 19. The Committee suggests that the national government and the local governments institute a direction group (regiegroep) as soon as possible to investigate the desirability and feasibility of a restructuring and scaling up process resulting in, e.g., three to five Network Companies. 20. This direction group should first investigate the optimal division of the networks and which uniform valuation method should be used. The group should also examine within which timeframe a restructuring could be implemented, and which actions need to be taken for this purpose. 21. The Committee considers it advisable that, together with the aforementioned restructuring, shareholders that wish to retain their holdings in the Network Companies receive advice and counselling. The direction group could play a part in this process. In addition, it is suggested that the national government should consider whether it is advisable to create an 'exit' for small shareholders, for example through the participation of the national government. 22. The Committee considers the unbundling stage to be a logical point in time for the national government to consult with the shareholding the local governments and to manage the aforementioned processes (i.e. unbundling, restructuring and professionalization). Given that some companies are already set to unbundle, it is recommended that the national government take action in this regard in the near future.

Status of shareholders' plans: various companies

Nuon Nuon's biggest shareholder, the province of Gelderland (44%), and a few other shareholders have indicated that they will not sell their shares during the next four to six years. Together these parties hold a majority of the shares in the company. The municipality of Amsterdam (9.6%) and the province of Friesland (12.6%), however, have indicated that they intend to sell their shares in Nuon.

Essent On 27 June 2008, the shareholders of Essent approved the plan to search for a foreign partner. In due course, they will sell their shares in Essent's energy production and supply branch.

ENECO/Delta The shareholders of ENECO and Delta have not made any public announcements as to their intentions with regard to their shareholdings in the relevant companies.

[1] NautaDutilh has some reservations as to the possibility of imposing such restrictions under applicable competition laws.

Contact

Harm Kerstholt T: +31 10 224 05 52 T: +31 65 130 4865

Elizabeth van Schilfgaarde T: +1 212 218 2964 M: +1 917 3718843

Privacy / General conditions / Disclaimer

This publication is intended to highlight certain issues. It does not intend to be comprehensive or to provide legal advice. If you would like to unsubscribe please use the unsubscribe option on the newsletter website. You can also send an e-mail to [email protected]. Please make sure that you put the word 'unsubscribe' in the subject field of your e-mail. Competition Law SIMPSON GRIERSON JULY 2008 Mergers & Acquisitions – Can Vendors in Acquisitions Be Liable For Breaches of the Commerce Act?

When the largest bus operator in Wellington, NZ Bus, Commerce Commission. The exact nature of the looked to acquire 100% of the second largest bus operator discussions at this meeting are in dispute, but there was (in which it already held 26%) the High Court, in a landmark some evidence that Commerce Commission decision, not only found NZ Bus to be in breach of the representatives hinted that NZ Bus might consider Commerce Act, but also found the Vendors liable as withdrawing its clearance application. This suggestion arose accessories. The Commerce Commission had also claimed in circumstances where delay was already beginning to accessory liability against NZ Bus' parent company Infratil, cause concern for NZ Bus. The option of withdrawing the but no liability was found by the High clearance application was available to Court. Following appeal to the Court of “Following appeal to NZ Bus if they were unhappy with the Appeal, the parameters of accessory the Court of Appeal, process for considering the application liability have become even more murky. proposed by the Commission. Given the critical importance of this the parameters of issue to the business community the Following the meeting, NZ Bus sought Commerce Commission has sought accessory liability for the Vendors' consent to waive the leave to put the matter before the Vendors have become condition requiring Commerce Supreme Court. We outline the issues Commission clearance for the sale. The below. even more murky.” Vendors agreed to the waiver on the basis they would have an indemnity from The Acquisition NZ Bus for any legal costs or fines that might result. The clearance was withdrawn and the agreement for sale and NZ Bus, 100% owned by Infratil, was the largest bus purchase went unconditional. The Commerce Commission company operating in the Wellington region. NZ Bus then commenced proceedings to prevent settlement, owned 26% of Mana Bus, the second largest bus company claiming a breach of section 47 of the Act by NZ Bus and operating in the region. accessory liability on the part of the Vendors and Infratil.

In 2005 the remaining shareholders in Mana Bus (Vendors) The High Court Decision agreed to sell their shares to NZ Bus subject to Commerce Commission clearance. NZ Bus applied for clearance in In the High Court, NZ Bus was found to have breached January 2006. Representatives of NZ Bus met with the section 47 of the Commerce Act on the basis that the acquisition was likely to substantially lessen competition in a fellow Judges and did not decide the issue for certain one market. way or another.

While this was relatively uncontroversial, the Court's next Justice Hammond - a stricter approach to accessory liability finding was less so. This was that the Vendors were liable as - Justice Hammond in the Court of Appeal considered that accessories to the breach by NZ Bus. The High Court held the broad approach to accessory liability adopted by the that, by agreeing to waive the condition requiring High Court could have significant implications for Commerce Commission clearance or authorisation, the commerce and professional practice. It would impact on Vendors had aided and abetted or conspired with NZ Bus to vendors of assets or shares and advisers involved in a breach section 47, or were directly or indirectly concerned transaction, and it would raise insurance and indemnity in, or party to the contravention by NZ Bus. Infratil was issues. found not liable as an accessory as the Commerce Commission could not show it had deliberately assisted NZ Taking this into account he adopted a stricter standard for Bus with knowledge of the essential facts. accessory liability. He found that it would be necessary to establish that there was "dishonest participation" in the The test used by Justice Miller in determining accessory substantial lessening of competition. As to what this would liability was as follows: mean, the Judge found that dishonesty did not mean unconscionable conduct. Rather the • An accessory is liable only if its “Justice Hammond question viewed objectively was whether participation was intentionally aimed adopted a stricter the defendant was guilty of commercially at the commission of the act that unacceptable conduct in the context of formed the contravention of section standard for accessory the case. 47, namely the acquisition of assets liability. He found or shares. Applying this approach to the facts, • An accessory must know the that it would be Justice Hammond found that accessory essential facts, being facts that necessary to establish liability should not have been imposed sufficiently establish a contravention on the Vendors. Their involvement was of section 47. that there was limited, their knowledge was restricted • Actual not constructive knowledge dishonest and their conduct could not be is required in determining the participation.” described as objectively dishonest. essential facts that an accessory must know. The test must be directed to the facts that Interestingly, on this approach, Justice have led the Court to conclude, as against the Hammond considered the position of Infratil to be more acquirer, that the transaction is likely to substantially finely balanced. In failing to see the Commerce lessen competition. Commission clearance process through, Infratil had taken a very real chance which was, in Justice Hammond's view, commercially unacceptable behaviour of the character The Court of Appeal Decision required for accessorial liability. Infratil was saved from liability by the finding of the High Court that Commerce The decision was appealed. The Court of Appeal agreed Commission staff did hint that NZ Bus might consider with the High Court that the acquisition was likely to withdrawing the clearance application. In those unusual substantially lessen competition. The focus of the Court circumstances it was difficult to say that going ahead with then turned to accessory liability for the Vendors and the transaction without a clearance was objectively Infratil. dishonest. But for that factual evidence, Justice Hammond would have decided this issue the other way. Different Approaches Within the Court of Appeal - Separate written judgments were provided by two of the Justice Arnold – knowledge and intention required - Justice judges and a different approach taken by each on the Arnold, who delivered a separate judgment, considered that question of accessory liability, one adopting the High the "dishonest participation" approach did not provide any Court's approach, the other preferring a more strict greater certainty than the approach adopted by the High approach. The third Judge simply agreed with both his Court. This was on the basis that the issue of what was commercially unacceptable conduct would depend on the Court's view on the facts of each case. Instead Justice Arnold adopted the same approach to accessory liability as the High Court, but still reached the same outcome as Justice Hammond – neither the Vendors nor Infratil were liable.

Where to Now?

As a result of the division between the Court of Appeal Judges on the issues of accessory liability, there is uncertainty as to the exact test that will be applied going forward. Will it be the "knowledge of the essential facts and intentional participation" test of the High Court, or the "dishonest participation" test of Justice Hammond?

It is not surprising therefore that the Commerce Commission announced on 4 July 2008 that it was seeking leave to appeal to the Supreme Court against the Court of Appeal's decision dismissing a claim for liability against Infratil. An express reason given by the Commission Chair for the appeal is to seek to "clarify the law as to accessory liability under the Commerce Act, which is now unclear following the Court of Appeal's decision".

As a result the saga will continue. Hopefully the Supreme Court will give firm guidance on the requirements for accessory liability so businesses involved in acquisitions have greater certainty as to when liability may arise. We will keep you updated.

Contact Information

Anne Callinan Shelley Cave Partner Partner DDI: +64 9 977 5031 DDI: +64 9 977 5260 Mobile: +64 21 403 592 Mobile: +64 21 660 090 Fax: +64 9 977 5046 Fax: +64 9 977 5067 [email protected] [email protected] Peter Hinton James Craig Partner Senior Associate DDI: +64 9 977 5056 DDI: +64 9 977 5125 Mobile: +64 21 446 866 Mobile: +64 21 497 713 Fax: +64 9 977 5067 Fax: +64 9 977 5046 [email protected] [email protected] Elisabeth Welson Partner DDI: +64 4 924 3400 Mobile: +64 275 924 340 Fax: +64 4 472 6986 [email protected]

FYI Competition Law is produced by Simpson Grierson. It is intended to provide general information in summary form. The contents do not constitute legal advice and should not be relied on as such. Specialist legal advice should be sought in particular matters. © Simpson Grierson 2008 Office Locations Auckland Office Wellington Office Christchurch Office 88 Shortland Street, HSBC Tower, 195 Lambton Quay, PO Box 874, Christchurch 8140, Private Bag 92518, Auckland, New Zealand PO Box 2402, Wellington, New Zealand New Zealand Tel +64 9 358 2222 Fax +64 9 307 0331 Tel +64 4 499 4599 Fax +64 4 472 6986 Tel +64-3-365 9914 Fax +64-3-379 5023 DX CX 10092. DX SX 11174.

Page 1 of 1

TAIWAN - Lee and Li

DRAFT AMENDMENTS TO SOIL AND GROUNDWATER POLLUTION REMEDIATION ACT

◎Jason Chou

The Environmental Protection Administration has prepared draft amendments to the Soil and Groundwater Pollution Remediation Act, which are now under consideration by the Legislative Yuan. The main focus of the existing Act is on remediation work. The proposed amendments would emphasize prevention of soil and groundwater pollution. The main points of the draft amendments are as follows:

‧A discharger of pollutants that cause pollution by accumulation must share responsibility for the work of site survey and remediation. No-fault liability for remediation will apply to polluters regardless of whether or not a polluter has complied with the relevant environmental protectionlaws and regulations.

‧An interested party of polluted land that has not fulfilled the duty of care of a good administrator will be liable jointly and severally with the polluter and with other parties potentially responsible for the pollution, to reimburse expenditures made by the environmental authorities under various provisions of the Act.

‧New provisions are to be introduced to authorize periodic monitoring of soil and groundwater in areas at high potential risk of pollution (such as industrial zones and science-based industrial parks) as a preventive measure.

‧A technician certification system is to be introduced to assure quality of enforcement efforts.

‧New provisions are to be introduced to deal with soil or groundwater pollution caused by natural environmental background factors. Sites where pollutants present in the natural environment have accumulated due to water action, dispersal, deposition, or irrigation are excluded from being designated as controlled sites. However, the local environmental authority should notify test results to the regulatory authorities for relevant industries and convene consultation meetings with those authorities, and, if necessary, may apply response measures under Article 15 of the Act. If there is a need for remediation of a site that is polluted due to natural environmental factors, and remediation is feasible, the local environmental authority should formulate a remediation plan, submit the plan for approval, and implement the plan.

‧New provisions are to be added to bar the disposal of polluted land. The environmental authorities should instruct the land registration authority for the area where a controlled site or remediation site is located to register a prohibition on disposal of the land concerned.

‧The existing health risk assessment mechanism is to be strengthened. New provisions are to be added whereby remediation targets for a polluted site may be set according to the results of the health risk assessment, in order to reduce the cost and speed up the remediation.

‧The fee base for remediation fees is to be expanded. Fees will be levied not only in respect of chemical substances, but also of other substances likely to cause pollution.

‧To ensure that expenditures made by the environmental authorities may be recovered as soon as possible, new provisions are to be introduced whereby registered property of a polluter or other relevant responsible entity may not be transferred or otherwise encumbered.

‧The current provisions requiring payments into the remediation fund prior to the implementation of a development plan for polluted land are to be repealed, in order to increase willingness to develop such land.

Lee and Li Bulletin_May 2008 Issue Tilleke & Gibbins International Ltd. 7 May 2008

MARKET DOMINANCE UNDER THE COMPETITION LAW

by Chaiwat Keratisuthisathorn and John Fotiadis Left: Chaiwat Keratisuthisathorn, Attorney Right: John Fotiadis, Consultant Commercial Department The Trade Competition Act diculty lies in how to dene the B.E. 2542 (1999) (TCA) seeks to market. test has been oered as a valid maintain a fair and open market by For example, consider a method for dening a “market” for prohibiting business operators company that creates a new hybrid trade competition purposes. The from exerting unfair inuence motorcycle that works on gas and SSNIP test looks at the “elasticity of through monopoly, exclusivity, electricity. What if it is the only demand” for a particular product price xing, quantity xing, company in Thailand that manu- versus other products. The SSNIP tying/bundling, etc. If any two factures such hybrid motorcycles? test asks: if a product’s price were business operators act together to If the market is dened as hybrid increased by 5%, would this eect such conduct, they may be motorcycles, then this motorcycle signicantly decrease the number liable for violating the TCA which company will have 100% market of sales of the product? In the case carries a prison term of up to three share. On the other hand, if the of the hybrid motorcycle, if there years and/or a ne of up to Baht 6 market is dened as all motor- was only one company that made million per violation. cycles, the company’s market share this product and they raised their The TCA applies not only to may be as lile as 1%. How the price by 5%--would customers any two or more business opera- “market” is dened plays a very continue to buy it or would they tors who are working together, but signicant role in identifying buy a cheaper gas bike instead? A also to a single business operator which business operators are signicant enough loss in custom- acting alone if that single operator “dominant” and which are not. ers caused by the price increase has “market dominance”. The TCA does not provide would suggest that the hybrid A “dominant business opera- any express denition for motorcycle does not constitute a tor" is clearly dened by Ministe- “market”, leaving it to the Trade market in itself. rial Regulation issued January 18, Competition Commission to dene Clearly there is a dierence 2007 as (a) one with 50% or more of on a case-by-case basis. between cancer treatment and market share, or (b) one of the One simple method for motorcycles. While a consumer three largest business operators determining the market of any may choose between a hybrid bike within a market who together hold good or service is by considering or a gas bike, medical treatments at least 75% or more of market whether a product can be substi- are usually given in conjunction-- share and individually hold at least tuted by another good or service. If i.e. there is oentimes no choosing 10%--regardless of whether the it can be substituted by another between one or the other. A cancer three business operators act jointly product, both shall be considered patient will utilize all available to carry on anti-competitive as being part of the same market. treatments until the disease is activities. In either case, the busi- For example, in the soap market, a successfully defeated. If the initial ness operator must also have total bar of soap can be substituted by treatment works, the others sales for the previous year within liquid soap. Therefore, bars of soap become unnecessary. The SSNIP the subject market of at least Baht 1 and liquid soap may be categorized test only contemplates market billion. as one unied “soap” market. denition based on price and For example, if Company A The question becomes a bit becomes less eective in dening has 60% market share, Company B more dicult when considering markets where (a) the consumer is has 20%, and Company C has 11% something like medicine. When a not choosing between products, and each has total sales of at least new and beer chemotherapy and (b) price is of minimal impor- Baht 1 billion, then Company C treatment for cancer is discovered, tance in the consumer’s choice. with only 11% may be treated as what market should this be catego- Ultimately the determination market dominant. rized under: (a) all medicines (very of market dominance is not a Determining market share large group), or (b) all cancer simple numerical calculation but and documenting sales are medicines (smaller group), or (c) all does, instead, turn on many relatively simple, which would chemotherapy treatments (even dierent legal and economic make determining which business smaller group)? factors which must be taken into operators are “market dominant” In the US and the EU, the account together. ' and which are not appear to be a SSNIP (Small but Signicant and simple task. Actually, the true Non-transitory Increase in Price)

© 2008 Tilleke & Gibbins International Ltd. Page 1 of 3

Health Law Advisory Bulletin

DEA Erects a Checkpoint on the Road to E-Prescribing

By Edwin D. Rauzi and Ingrid Brydolf [June 2008]

Nearly everyone in the federal government—from the president on down—has been extolling the benefits of electronic prescriptions and encouraging the health care delivery system to adopt the necessary technologies and practices. On a broader scale, Congress has enacted legislation promoting electronic commerce generally, and authorizing the use of electronic signatures for most purposes. Despite these pressures, the Drug Enforcement Agency (DEA) had, until June 26, 2008, continued to hang on to paper citing concerns over drug diversion.

Now, after approximately seven years of work, the DEA has proposed new regulations to allow electronic prescriptions for controlled substances listed on Schedules III-V. See 73 FR 36722-36782 (June 27, 2008). These are drugs that have the potential for abuse, but include common substances like codeine cough syrup. Because these are proposed regulations, the DEA is soliciting comments during the next 90 days.

In light of the DEA's historical focus on the risks of drug diversion, its efforts are aimed largely at electronic security and authentication. If finalized, the regulations would affect primarily physicians, pharmacies and hospitals, and represent a boon to software vendors and auditors. There are special rules and options for federal health care facilities which are beyond the scope of this bulletin.

The DEA seeks to require an intricate system of checks and cross-checks, both human and programmed. The physician must prove his identity and review each month a log of prescriptions issued using his DEA number. Pharmacies must confirm weekly that the physician's authority to prescribe has not been revoked, have their computers audit themselves, and have auditors audit the computers. Everyone keeps records, with backups off-site, and has a duty to report security breaches to the DEA. Significantly for physicians and other prescribers, the DEA will hold the prescriber of a controlled substance responsible if a prescription is transmitted electronically on a system that does not meet the requirements of the DEA regulations.

DEA's proposal highlights

Identity Proofing. A practitioner that wants to electronically prescribe controlled substances must undergo “identity proofing.” The approval requires face-to-face contact with an entity that is authorized to conduct in-person identity proofing, including:

z For physicians with current staff privileges, a hospital credentialing office; z The state authority that either licenses the practitioner or authorizes her to prescribe controlled substances; or z A state or local law enforcement agency.

The Ordering Computer System. The electronic prescribing system must require that:

z Practitioners use two-factor authentication that meets defines standards. z Practitioners use a hard token, such as a PDA or other handheld device, smart card, thumb drive, etc. If the hard token is lost, and the practitioner fails to notify the computer service provider, then he will be held responsible for any controlled substance prescriptions written using the hard token. z The prescription cannot be capable of being printed. z Practitioners must sign in if they are inactive on the system for more than two minutes. z If the practitioner is licensed in more than one state, then the practitioner must have a separate authentication protocol for each state in which she prescribes. Page 2 of 3

Signing the prescription. The practitioner must use the two-factor authentication process immediately before signing the prescription. The practitioner must also confront and “positively accept” the following statement:

“I further declare that by transmitting the prescription(s) information, I am indicating my intent to sign and legally authorize the prescription(s)."

Duties of the Physician. The physician must:

z The practitioner must retain sole possession of the hard token and cannot share the password with any other person or let that person use the token or enter the password. z The practitioner must review a log of prescriptions each month to determine whether the prescriptions issued under his DEA registration number were, in fact, issued by him and whether any prescriptions appear to be unusual based on the practitioner's known prescribing pattern. The practitioner must indicate on the log that he has reviewed it. That record is retained. z The practitioner must determine initially and at least annually thereafter that the system he is using meets the DEA's requirements.

Duties of a Pharmacy. The pharmacy must:

z Check at least once a week to see if a practitioner's authority has been terminated, revoked, or suspended. z Notify DEA within one business day of a security breach. z Have a qualified third party conduct a WebTrust or SysTrust audit for system security and processing integrity at the outset and annually thereafter. In the event that the audit identifies any noncompliance, the service provider must provide a copy of the report to the DEA. z Verify that the practitioner's DEA registration was valid at the time the prescription was signed. z Link data about the prescription (e.g. units dispensed) to each controlled substance prescription record. z Create and maintain a backup copy of all controlled substance prescriptions at a separate site. z Transfer the records to the storage site at least once every 24 hours. z Create and maintain an internal audit trail for five years. z Establish a list of auditable events, including attempted or successful unauthorized access, use, disclosure, modification, or destruction of information. The system must analyze the audit logs at least once every 24 hours and generate an incident report that identifies each auditable event. Incidents must be reported within one business day.

While some had feared more onerous requirements, the DEA proposal may continue significant impediments for electronic prescribing. Given the cost, complexity and risk associated with electronic prescribing for controlled substances, some organizations (and physicians) may decide that electronic prescriptions are simply not worth the hassle and liability despite the benefits to patient safety. If Medicaid prescriptions and controlled substances prescriptions remain on paper, one has to wonder whether the laudable goals of electronic prescribing will continue to remain elusive.

For more information, please contact:

Ingrid Brydolf Jill H. Gordon Portland, Oregon Los Angeles, California (503) 276-5804 (213) 633-6875 [email protected] [email protected]

Edwin D. Rauzi Paul T. Smith Seattle, Washington San Francisco, California (206) 757-8127 (415) 276-6532 [email protected] [email protected]

This advisory is a publication of the Health Law Group of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is Page 3 of 3

to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.

Copyright 2008, Davis Wright Tremaine LLP.

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HEALTH UPDATE | July 2008| 1 Hogan & Hartson LLP HEALTH UPDATE

PhRMA Amends Guidelines for Interactions with Healthcare Professionals

The Pharmaceutical Research and Manufacturers of America (PhRMA) has revised its voluntary guidance document, the Code on Interactions with Healthcare Professionals. The revised PhRMA Code,1 which will take effect in January 2009, imposes new restrictions on gifts, meals, consulting venues and support for educational programs and includes new guidelines regarding the use of prescriber data. In addition, the revised PhRMA Code establishes guidelines for fostering compliance with the Code, including an annual certification process.

Many pharmaceutical companies have adopted the 2002 version of the PhRMA Code or have otherwise developed policies and procedures for compliance with the Code to help ensure that their relationships with healthcare professionals meet industry ethical standards. In addition, laws in California and Nevada, and legislation pending in other states, tie adoption of, or compliance with, the PhRMA Code to requirements for some companies that operate in the state. In the coming months, we expect that pharmaceutical manufacturers will be evaluating the revised PhRMA Code and assessing what changes to existing business practices may be necessary in order to certify compliance with the revised PhRMA Code when it becomes effective.2

The revised Code follows the same form as the previous version, with general guidance organized by type of interaction with healthcare professionals, followed by some illustrative questions and answers (Q&As). The following is a summary of key modifications in the revised Code.

Basis for Interactions While affirming the importance of interactions with healthcare professionals, the revised Code now more specifically addresses the purpose of and limits on these interactions. The revised Code also affirms that promotional materials provided by or on behalf of the company should be accurate, balanced, make only properly substantiated product claims, and comply with all other Food and Drug Administration (FDA) requirements.

TAKE A CLOSER LOOK

09.17-18.2008 Hogan & Hartson Partners, 1 The revised PhRMA Code is available at Alice Valder Curran and http://www.phrma.org/files/PhRMA%20Marketing%20Code%202008.pdf. Mitchell Lazris to speak at Summit on the Medicaid Drug 2 The AdvaMed Code on Interactions with Health Care Professionals provides the Rebate Program and Other Public Sector Reimbursement compliance guidance for medical device manufacturers. AdvaMed is also in the process of revising Programs in Chicago, IL. its guidance. We will assess key difference between the revised PhRMA Code and the current AdvaMed Code in a separate update.

HEALTH UPDATE | July 2008| 2

Gifts The revised Code dramatically alters the standards with regard to permissible gifts. The revised Code no longer permits reminder items or patient treatment items, but continues to permit gifts of educational materials. The new prohibition means that companies should not continue their long- standing practices of providing practice-related items of minimal value (e.g., pens, mugs, notepads), even if those items accompany educational materials. One Q&A makes clear that non- educational items may not be given to healthcare professionals for patient use even if they are of minimal value (e.g., pedometers, stopwatches). Another Q&A specifically reverses PhRMA’s position on stethoscopes, stating that medical equipment designed for patient treatment, rather than education, is prohibited. The revised Code still permits occasional gifts designed primarily for the education of patients and healthcare professionals, provided that the item is valued at $100 or less and does not have value to the healthcare professional outside of his or her professional responsibilities. Examples of permissible gifts described in the Q&As include: medical text books, subscriptions to scientific journals, copies of treatment guidelines, anatomical models, informational sheets and brochures, patient starter kits and written materials for professionals and patients about adherence to medicine regimens.

Meals The revised PhRMA Code affirms that meals may be offered as a business courtesy in connection with informational presentations, but imposes new restrictions on these meals. Under the revised Code, field sales representatives and their immediate managers may provide an occasional modest meal only if the meal and presentation occur in the healthcare professional’s office or a hospital setting. The Q&As confirm, however, that the Code does not prohibit other company employees from offering occasional, modest meals at other venues that are conducive to informational communication. In addition, the revised Code clarifies that in-office meals may be provided to the staff attending the informational presentation.

Recreation and Entertainment Unlike the prior version, the revised Code expressly prohibits entertainment and recreation to any healthcare professional who is not a salaried employee of the company. Previously, recreation and entertainment were generally prohibited, but were permitted in the context of consulting meetings. The revised Code states that entertainment and recreation should not be offered regardless of the value of event and may not be offered even where the practitioner is providing a legitimate service to the company (e.g., speaker training or consultant meeting) or the event is subordinate to a gathering with an educational purpose (e.g., promotional scientific presentations).

Educational Events While the 2002 Code contained a single set of guidelines for educational events and professional meetings, the revised Code distinguishes between support for continuing medical education (CME) and support for third-party educational and professional meetings. Although the guidance with regard to third-party educational and professional meetings is largely unchanged, the revised Code contains additional guidance on support of CME.

HEALTH UPDATE | July 2008| 3

The discussion of CME affirms the principles set forth in the Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers (OIG Guidance), including that the company should separate its grant making from its sales and marketing and should establish criteria to ensure that financial support for CME is not an inducement to prescribe or recommend a particular medicine or treatment. The revised Code indicates that companies should follow the standards for commercial support established by the Accreditation Council for Continuing Medical Education (ACCME) or other entity that accredits the CME. Consistent with the most recent revisions to the ACCME Standards for Commercial Support, the revised PhRMA Code makes plain that the company should not provide any advice or guidance regarding the content or faculty for a particular CME program funded by the company, even if such input is sought by the CME provider. Moreover, although a CME provider may allocate financial support to meals for all participants, under the revised Code a company should not provide meals directly to healthcare professionals at CME events.

Consultants The revised Code offers additional details regarding the selection and compensation of consultants. Companies are advised to base decisions regarding the selection and retention of consultants on defined criteria such as general medical knowledge and reputation or knowledge and experience in a therapeutic area. Building on the prior guidance that compensation to consultants must be reasonable, the revised Code expressly states that any compensation or reimbursement made in connection with a consulting arrangement should be based on fair market value. The revised Code deviates from prior guidance by stating that resorts are not appropriate venues for consulting meetings.

Speaker Programs As in the prior version, the revised Code offers specific guidance on company speaker programs. The revised Code asserts that each company should have policies on the appropriate use of speakers and cap the total amount of annual compensation it will pay to a healthcare professional in connection with all speaking arrangements. The revised Code also addresses the content of speaker programs, observing that companies and speakers should be clear that company speaker programs are distinct from CME and should include disclosures regarding the company’s involvement. In addition, the revised Code states that companies should periodically monitor speaker programs for compliance with FDA requirements. In keeping with the new prohibition on recreation or entertainment, a revised Q&A expressly prohibits providing golf or expensive meals to healthcare professionals in speaker training programs.

Formulary and Clinical Practice Committee Members The revised Code includes a new section addressing relationships with members of committees that set formularies or develop clinical practice guidelines. The revised Code states that companies that use healthcare professionals who serve in these roles as speakers or consultants must require these healthcare professionals to disclose to the committee the existence and nature

HEALTH UPDATE | July 2008| 4 of their relationships with the company. The disclosure obligations should extend for two years beyond the termination of the consulting relationship and should obligate the healthcare professional to follow any applicable committee procedures, including recusal from decision-making where required.

Prescriber Data There is a new section in the revised Code on the appropriate use of prescriber data. The revised Code calls for companies to respect the confidentiality of prescriber data and develop the infrastructure to ensure that the company uses these data responsibly, including policies on data use, employee education, a designated internal contact for data use inquiries, and identified penalties for misuse of data. The revised Code also provides that companies should abide by the decisions of any healthcare professional who asks that her or his data not be made available to company sales representatives and suggests that this may be accomplished by following the rules of voluntary programs that facilitates prescribers’ ability to make this choice.

Fostering Compliance The revised Code add new sections on employee training and adherence to the Code. In keeping with the OIG Guidance, the revised Code provides that all representatives who visit healthcare professionals on behalf of the company should be trained on the applicable laws, regulations, and industry codes that govern their interactions as well as on the information necessary to ensure compliance with FDA requirements. Additional and updated training should be provided as needed. Companies also should assess representatives periodically to ensure compliance with company policies and standards of conduct and take appropriate action to address non- compliance.

The revised Code provides that each company should adopt procedures to ensure adherence with the Code. PhRMA is creating a process through which each company’s Chief Executive Officer and Chief Compliance Officer may sign an annual certification that the company has policies and procedures to foster compliance with the Code. Companies are encouraged to obtain external verification at least once every three years that it has such policies and procedures. PhRMA will establish a website that lists the names of those companies submitting annual certifications along with the contact information for their Chief Compliance Officers. In addition, once PhRMA establishes guidance regarding external verification, its website will state if a company has obtained verification of its compliance policies from an external source.

Effective Date of the Revised Code The revised PhRMA Code will take effect in January 2009.

HEALTH UPDATE | July 2008| 5

We expect that many companies will need to implement changes to their policies and procedures to conform to these new requirements, and will need to retrain their employees accordingly. Prompt attention to these issues will help ensure that companies may make timely certifications to PhRMA in the new year. We would be happy to help you assess your existing compliance framework and develop and revise policies and documentation, as necessary, to comply with the revised PhRMA Code and related obligations under the California and Nevada marketing disclosure laws. Please contact one of the authors below or the Hogan & Hartson attorney with whom you have an existing relationship for more information.

ERIC M. BAIM THOMAS N. BULLEIT [email protected] [email protected] 202.637.5537 202.637.8276 Washington, D.C. Washington, D.C.

JONATHAN L. DIESENHAUS DANIELLE M. DRISSEL [email protected] [email protected] 202.637. 5416 202.637. 8891 Washington, D.C. Washington, D.C.

ISABEL P. DUNST ROBERT G. MALKIN [email protected] [email protected] 202.637.5818 202.637.6469 Washington, D.C. Washington, D.C.

HELEN R. TRILLING [email protected] 202.637.8653 Washington, D.C.

This Update is for informational purposes only and is not intended as basis for decisions in specific situations. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship.

Copyright © 2008 Hogan & Hartson LLP. All rights reserved. Hogan & Hartson LLP is a District of Columbia limited liability partnership with offices across the United States and around the world. Some of the offices outside of the United States are operated through affiliated partnerships, all of which are referred to herein collectively as Hogan & Hartson or the firm. www.hhlaw.com

Ninth Circuit Ruling: Employee Text Messages Shielded from Employer Review

June 26, 2008

On June 18, the Court of Appeals for the Ninth Circuit held in Quon v. Arch Wireless Operating Co., No. 07-55282 (9th Cir.), that employee text messages are subject to the Stored Communications Act of 1986, and that employees have an expectation of privacy in such messages under certain circumstances pursuant to the Fourth Amendment. This case is of particular interest in that it highlights the traps that can ensnare employers that monitor such communications, but also suggests ways that employers can protect themselves from stumbling into similar situations.

In Quon, the City of Ontario, California (the City) acquired 20 two-way pagers for use by its police force from Arch Wireless (Arch) in 2000. Pursuant to the subscriber agreement between Arch and the City, each pager was allotted 25,000 characters per month, after which the City was required to pay overage fees. At the time it took possession of the pagers, the City did not have a formal pager-user policy in place, although it did have policies pertaining to employee Internet and email usage. Once the pagers were in use, the City held meetings with its employees to explain that pagers would be subject to the existing computer policy, which included a notice that the City had the right to inspect the content of messages. The City also developed an informal policy concerning overage fees for usage that exceeded 25,000 characters, which called for individual users to reimburse the City for the overage charges.

In 2003, the Police Department opened an internal investigation into pager usage and overage charges. As part of this investigation, the department obtained transcripts of the text messages from Arch, the service provider. Prior to releasing the transcripts, Arch made no effort to assess the personal or private nature of any of the communications contained in the transcripts. A review of those transcripts revealed that Sergeant Jeff Quon, a member of the City’s SWAT team, had exceeded the 25,000 character limit by 15,158 characters and that he had been transmitting sexually explicit messages to others within the department.

Officer Quon and others implicated by the transcripts, including Quon’s wife, sued Arch and the City in 2003, claiming the department’s review of their messages violated their privacy rights.

Specifically, the officers alleged that Arch had violated the Stored Communications Act, 18 U.S.C. §§ 2701-2711 (SCA), and that the City had violated their Fourth Amendment rights. On motion for summary judgment, the lower court held that Arch had not violated the SCA because the company was a “remote computer service” (RCS) under Section 2702(a) of the SCA and that it had committed no harm when it released text messaging transcripts to its subscriber, the City. The District Court also

1 held that the City and the Police Department had not violated the Fourth Amendment because the plaintiffs could not show that they had a reasonable expectation of privacy in the text messages.

The appellate court began its analysis by first ascertaining the proper characterization of Arch in these circumstances. Moreover, Arch’s culpability hinged on whether it was a “remote computer service” or an “electronic communication service” (ECS), as defined by the SCA. If found to be the former, Arch could provide the transcripts to the City because Section 2702(b)(3) of the SCA permits the release of private information after the lawful consent of the subscriber, in this case, the City. On the other hand, if found to be an ECS, Arch could not release the messages without the lawful consent of “an addressee or intended recipient of such communication.” 18 U.S.C. § 2702(b)(1).

Under Section 2510(15) of the SCA, an ECS is “any service which provides to users thereof the ability to send or receive wire or electronic communications.” In Section 2711(2), an RCS is defined as “the provision to the public of computer storage or processing services by means of an electronic communications system. According to the Ninth Circuit, the “plain language of the SCA” and the legislative history to that act dictated that Arch was an ECS and that as such, Arch acted unlawfully when it released the transcripts of the messages with only the consent of the subscriber, and not that of an addressee or intended recipient of the communication.

The court next determined that the plaintiffs had a reasonable expectation of privacy in the messages, and that the police department’s review of the messages violated their Fourth Amendment rights. In arriving at this conclusion, the court first turned to whether the recipients of Quon’s messages had a reasonable expectation of privacy in the messages being sent. In answering this question in the affirmative, the court found that the content of text messages was analogous to the text found in a letter that had been placed in a sealed envelopment, and that the contents of such text had long been found to enjoy Forth Amendment protection. With respect to Sergeant Quon himself, the court noted that in spite of the City’s attempt to fold pager usage into its more general computer usage policy, the police department had developed an informal custom regarding pager usage, and that that custom had reasonably led Quon to believe that so long as he paid the overage fees, his messages would not be audited. The court noted that Quon had exceeded the character cap “three or four times,” but that in each of those instances, he had simply been asked to pay the extra charges and that his messages had not been reviewed.

Having found that the plaintiffs had a reasonable expectation of privacy with respect to the content of the text messages, the court next examined whether the search had been reasonable. In concluding that it had not been reasonable, the appellate court observed that a number of less intrusive options were available to the department. For example, the court observed that the department could have placed Quon on notice that he was not to use his pager for personal communications and that his messages would be reviewed to check compliance. Or, Quon could have been asked to collect his past messages, redact those of a personal nature, and then submit the redacted transcript to the department for examination with a count of the characters used.

What This Means

The Ninth Circuit’s opinion is a warning about the dangers of allowing informal customs to trump established policies and the consequences of lax enforcement of existing policies. The case also suggests some straightforward steps that employers can take to avoid being placed in a position similar to that of the City of Ontario. For example, company-issued computer usage policies should

2 be crafted broadly enough to include all technology being used by company employees. Similarly, companies should avoid the creation or evolution of “informal” processes for dealing with the use of company-issued technology devices, and instead establish formal policies and procedures that it uses on a consistent basis.

Morgan Lewis’s eData Practice was formed in early 2004 to handle the increasing complexities of discovery and management of electronically stored information. eData’s “best practices” are nationally recognized, and its resources include four discovery management centers on the East and West coasts, as well as a think tank, The Discovery Manager’s Roundtable.

For more information regarding the subject discussed in this LawFlash, please contact one of the following Morgan Lewis attorneys:

Philadelphia Stephanie A. “Tess” Blair 215.963.5161 [email protected] Jacquelyn A. Caridad 215.963.5275 [email protected]

San Francisco Renee Lawson 415.442.1443 [email protected]

Robert B. Wiggins 202.739.5040 [email protected]

About Morgan, Lewis & Bockius LLP Morgan Lewis is a global law firm with more than 1,400 lawyers in 22 offices located in Beijing, Boston, Brussels, Chicago, Dallas, Frankfurt, Harrisburg, Houston, Irvine, London, Los Angeles, Miami, Minneapolis, New York, Palo Alto, Paris, Philadelphia, Pittsburgh, Princeton, San Francisco, Tokyo, and Washington, D.C. For more information about Morgan Lewis or its practices, please visit us online at www.morganlewis.com.

This LawFlash is provided as a general informational service to clients and friends of Morgan, Lewis & Bockius LLP. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship. These materials may be considered Attorney Advertising in some states. Please note that the prior results discussed in the material do not guarantee similar outcomes.

© 2008 Morgan, Lewis & Bockius LLP. All Rights Reserved.

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