Delivery app monopoly is criticized by the KFME

The Korea Federation of Micro Enterprises (KFME) and Justice Party lawmaker Rep. Choo Hye-sun are objecting to Delivery Hero’s acquisition of Woowa Brothers, operator of the Baedal Minjok food delivery service.

The KFME and Choo held a press conference Friday at the National Assembly to urge the Fair Trade Commission (FTC) to strictly evaluate the acquisition of Woowa Brothers by the Berlin-based company.

Delivery Hero, which operates food delivery apps in more than 40 countries, also runs Yogiyo and Baedaltong in Korea. They are the second- and the third-largest food delivery apps after Baemin.

FTC approval is required for the acquisition of Woowa Brothers.

Baedal Minjok, also known as Baemin, promised that commissions won’t be raised following the acquisition, but the KFME says that the acquisition would “kill” restaurants.

“Self-employed restaurant owners are already facing huge pressure from delivery apps commissions and are cutting down investment amid the increase in labor costs and the sluggish economy,” said a spokesperson for the KFME. “We believe the monopoly, in the long run, will result in the rise of delivery commissions.”

“If delivery apps demand higher commissions from us, we are the ones who have to pay for the increased cost,” said Lee Eun-pyo, who runs a fried rice restaurant in Mapo District, western Seoul.

An owner of a Chinese restaurant in Namdaemun, central Seoul said, “After Delivery Hero acquired Baedaltong, restaurants started receiving more orders from Yogiyo than from Baedaltong. Yogiyo demands higher commissions.”

Baemin, Yogiyo and Baedaltong have 95 percent of the food delivery market in Korea, according to a recent report from the Ministry of SMEs and Startups.

“In a market that is dominated by a single operator, injustice naturally follows,” said Choo.

A Korea Federation of SMEs survey found more than half of restaurants have no written contracts with delivery apps regarding returns.

BY JIN MIN-JI [jin.minji@joongang.co.kr]