Merger of food delivery service apps face objection by franchise shop owners

By Lim Chang-won Posted : December 16, 2019, 14:56 Updated : December 16, 2019, 14:56

[Gettyimages Bank]

SEOUL -- The integrated operation of South Korea's two biggest food delivery service apps, led by Delivery Hero, a Berlin-based company, may go through meticulous state evaluation as franchise shop owners expressed concerns about fee hikes and a monopolistic market.

Delivery Hero (DH), a Berlin-based online food-delivery service that runs Yogiyo, agreed on December 13 to acquire an 87 percent stake held by foreign and domestic investors in Woowa Brothers, the operator of Baedal Minjok. Baedal Minjok and Yogiyo will retain independent services and brand names at home in a strategy to increase consumer convenience while maintaining a competitive system.

DH and Woowa agreed to set up an equally owned joint venture in Singapore. As one of DH's three global advisory committee members, Woowa CEO Kim Bong-jin will head the joint venture and take charge of DH's businesses in 11 Asian countries. Woowa can be listed on the Frankfurt stock market in Germany.

An association of franchise shop owners in South Korea said in a statement on Monday that delivery apps obviously play a positive role in providing various information and convenience to consumers, but many owner-operators are suffering from the burden of fees and advertising expenses. "Ahead of the abnormal situation in which more than 90 percent of the delivery app market is dominated by German capital, owner-operators have fears of various fee hikes and the realization of despotism."

The association urged the Fair Trade Commission, an anti-trust watchdog in South Korea, to review the deal by DH and Woowa and work out a fundamental way to solve the problem of commission fees. It wants the establishment of a public delivery app platform.

In its analysis, Hana Financial Investment said that DH will be able to expand its influence across the platform food delivery market. "The acquisition is consequently positive for DH in terms of expanding its penetration into Asian markets and improving profitability."

Kim, 43, expressed regret for listing Baedal Minjok in Germany, but he described his decision as inevitable to survive in a market where competition is getting fierce due to an inflow of foreign capital. "What I think is important is change and survival. Only those who drive change or respond well to change survive," he said in a notice to employees.
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