S Korea restaurant owners voice concern over Delivery Hero deal

January 06, 2020 13:47
Restaurant owners, food delivery riders and lawmakers in South Korea have urged the nation's antitrust regulator to thoroughly review the Delivery Hero-Woowa Brothers deal. Photo: Bloomberg

Restaurant owners in South Korea have expressed concern over food delivery giant Delivery Hero’s proposed US$4 billion acquisition of rival player Woowa Brothers, saying the move could undermine competition and lead to higher fees.

Restaurant owners voiced fears that the new dominant player would raise commissions that it charges restaurant owners for taking orders via their apps, Reuters reports.

“The biggest problem is that the companies can move the market to whatever direction they want to,” Kim Kyung-moo, who runs a franchise restaurant, was quoted as saying at a news conference at the parliament on Monday.

Restaurant owners, food delivery riders and lawmakers urged the Korea Fair Trade Commission (KFTC) to thoroughly review the potential merger, which they said could also limit consumer choices.

Delivery Hero, the second-largest food delivery app operator in South Korea, said last month that it agreed to buy larger rival Woowa Brothers.

The combination of the two giants would create an entity with a combined market share of nearly 99 percent in food delivery apps, according to data from mobile big data platform IGAWorks.

A Woowa Brothers spokesman told Reuters that the firm is not planning on increasing commission fees.​​​​​​

South Korea, with a dense population and high smartphone use, is the world’s fourth biggest market for online food orders, with an annual value of US$5.9 billion.

Berlin-based Delivery Hero submitted an application to KFTC for the Woowa deal approval, which is pending.

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