Despite ongoing government efforts to control false and exaggerative labels and advertisements, there have been quite a number of cases where a business entity commercially selling health functional foods makes unjust sales profits by advertising functionalities that have not been approved by the Minister of Food and Drug Safety, or placing false labels and advertisements with respect to the raw materials, manufacturing method, etc., of the health functional food concerned. In response, a more fundamental solution is needed.

The current Act prescribes that the mandatory minimum sentence and restitution of unjust enrichment shall be applied only to cases where labels and advertisements are likely to mislead consumer into believing that the relevant foods are effective in preventing or treating a disease or confuse consumers about the relevant foods with medicines.

Accordingly, the Amedment expands the scope of application to include business entities that have repeatedly run false, exaggerative or misleading advertisements, thereby contributing to protecting consumers from false and exaggerative labels and advertisements (Article 43 amended).

The current Act also stipulates that a person who has violated provisions on sales, etc. of harmful health functional foods shall be punished by imprisonment with labor for not more than ten years or by a fine not exceeding 100 million won and when a person recommits the violation within five years since such sentence has become final and conclusive, a fine at least four times but not exceeding ten times the retail price thereof may be imposed on the person. However, it is necessary to strengthen the effectiveness of the system by mandating the imposition of the concurrent fine (Article 43, paragraph 3).
Moreover, a fine imposed for the restitution of unjust enrichment is based on retail prices, but it is unclear as to whether such retail price refers to the end consumer price and it is difficult to accurately determine the retail price, etc., for products that are used as intermediate ingredients. In this regard, it is necessary to clarify the provision by modifying its base of a fine from the the retail price to the sale price (Article 37-2, paragraph 1 and Article 43, paragraph 3).
On a further note, the Food Sanitation Act and other similar laws impose up to 1 billion won for penalty surcharges in lieu of business suspension. The Amendment increases the maximum penalty surcharge from 200 million won to 1 billion won, thereby aiming to ensure fairness in relation to similar laws and the effectiveness of penalty surcharges (Article 37).
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