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[228] 2020.01.17
Baedal Minjok and Yogiyo are now One: Concerns over a Market Monopoly Korea Fair Trade Commission must Actively Consider Information on a Monopoly in an Innovative Industry upon a Merger Review

In December, Baedal Minjok (BM), Korea’s top food delivery app (market share: 55.7%) was bought by the multi-national food delivery operator Delivery Hero (DH). DH is already an operator of BM’s main competitors, Yogiyo and Baedaltong, which are the second (33.5%) and third favorite (10.%) delivery apps in South Korea; thus, the multi-national firm has taken over the Korea’s on-demand delivery app market. Woowa Brothers, which runs the BM app, announced that the commission fee for advertisements would be lowered by a percentage point (from 6.8% to 5.8%) as reassurance for restaurant owners and users, but we cannot help but worry about how their fee structure will alter.
According to an analysis conducted in 2018, BM promoted their “zero-charge” campaign to attract restaurant owners, but they actually launched a “Super List” for the owners who opted for the Ultar Call/Power Call advertisement service, in which restaurants pay a flat monthly rate. The Super List is essentially a bidding program: the top three store operators that offer the highest bids will stay at the top of the app list, so that BM has achieves a high operating profit. This successful business model has been copied by the other app operators, including Yogigo and Baedaltong. Meanwhile, Yogio has been notorious for bullying restaurants with its tiered fee structure: 4% for franchises and 12.5% for small shop owners.
The advent of digitalization and smartphones has led to the rise of the online on-demand food delivery service platforms/. This market has grown by 10 times compared to 2013 (KRW 364.7 billion) and the size of the market is expected to reach over KRW 10 trillion in the next few years. Nowadays, the on-demand food delivery app is a common and essential option for users and restaurant owners, as users can order, pay and get their food quickly. However, the advertising fees are too expensive and the operators of the delivery apps do not protect the owners and delivery drivers. Moreover, if the food delivery app industry is reshaped by merging the three biggest apps, it is the restaurant owners and the app users who will be most damaged by a monopolized market, since the owners would be forced to offset their losses by increasing their food prices, in turn reducing the amount of food or turning free services into paid services. Furthermore, the users would no longer expect the diversified services, as they would have no other option and little or no competition to provide better services.
The proposed deal is awaiting a review by the Korea Fair Trade Commission (KFTC). The KFTC should review the merger with a focus on how the monopoly market will affect the consumer benefits; especially, whether the takeover of information in the mobile app market will hinder the competition. We therefore call on the KFTC to provide new merger review guidelines for this innovative industry, to achieve a fair trade environment. KNCCO will also thoroughly and carefully monitor the food delivery app market.


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