What Awaits Emart, the First Violator of the Hangover Remedy Certification System?

On-site Investigation at Emart Headquarters on the 11th Afternoon
Minimum 15-Day Business Suspension as Administrative Sanction Standard
Targeted Suspension Possible for PB Business Division

On the 11th, the Ministry of Food and Drug Safety (MFDS) began an on-site investigation into Emart for selling a hangover relief product that had not undergone human application testing, drawing attention to the level of administrative sanctions. This comes just one day after our exclusive report on the related issue <[Exclusive] Emart Faces Backlash for 'Stock Clearance' of Prohibited Hangover Relief Products>.

The Food Management Division of MFDS is conducting the on-site investigation this afternoon at Emart's headquarters in Jung-gu, Seoul. MFDS plans to verify whether Emart had human application test evidence for the hangover relief product "Bisangdaechak" when selling it. An MFDS official stated, "There is evidence that sales have continued since January 1," adding, "We will check whether they currently possess empirical data, as the product was sold without human application test data."

"Bisangdaechak" is Emart's private brand (PB) health functional food product, manufactured by Inseong Pharmaceutical, with Emart acting as the distribution specialist. Alongside the on-site investigation, MFDS will also verify whether Inseong Pharmaceutical holds human application test reports. If the manufacturer possesses such documentation, administrative sanctions may be avoided.

Previously, Emart admitted that due to a misunderstanding during the certification grace period for hangover relief products, they sold the product without undergoing human application testing. In fact, sales of "Bisangdaechak" were halted at offline stores and convenience stores from the end of last year.

However, MFDS is unlikely to separately investigate the circumstances where Emart allegedly conducted a 'stock clearance' by selling the product on its affiliate SSG.com at prices approximately 75% lower than normal retail prices during this on-site investigation. MFDS explained that the Food Labeling and Advertising Act focuses on food safety management and does not intervene in pricing policies.

According to the "Enforcement Rules of the Food Labeling and Advertising Act," advertising or labeling that could cause consumers to mistakenly perceive a non-health functional food as a health functional food results in a 15-day business suspension for the first violation. The second violation leads to a one-month suspension, and the third violation can result in up to a two-month suspension. An MFDS official said, "If a violation of the obligation to prepare empirical data is detected, administrative sanctions can be imposed immediately," adding, "However, since the final administrative sanctions are imposed by local governments, it will take time from investigation to sanction."

Emergency measures sold on SSG.com on the 5th. Screenshot from the SSG.com app.

However, since Emart currently operates 132 discount stores (large marts) and 154 stores including Traders, it may be subject to fines instead of business suspension. The basis for calculating fines is the previous year's sales, with fines equivalent to one day of business suspension imposed. Given that Emart's discount stores generate monthly sales of approximately 900 billion KRW, it is more likely that administrative sanctions will target only the PB product rather than suspending all store operations.

An MFDS official said, "It does not mean that all of Emart's operations will be suspended," adding, "We need to examine the matter more closely, but sanctions on the PB business are likely."

Currently, Emart operates private brands such as Peacock and No Brand, focusing on food and industrial products, in addition to BioPublic PB, which produces health functional foods. Therefore, if fined instead of suspended, there is a possibility that Emart's performance this year could worsen. Last year, Emart's discount stores recorded sales of 11.6665 trillion KRW, a 3.5% decrease, and an operating loss of 19.9 billion KRW. This deficit was due to costs incurred from a ruling on ordinary wages reflected in the accounting books.