Korean food delivery app Yogiyo fined for market dominance
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South Korea’s antitrust regulator has fined food-delivery app Yogiyo US$382,000 for exploiting its dominant position in the local market.
The Fair Trade Commission (FTC) also ordered Yogiyo to take corrective measures, saying the company unilaterally introduced a scheme to prevent its contracted restaurants from selling their foods at lower prices through other apps between 2013 and 2016.
During the three-year period, Yogiyo returned as much as $4 to customers if an order from its app was more expensive than that from other apps.
Yogiyo terminated the contracts for 43 restaurants which refused to follow the scheme, the FTC said, ruling that Yogiyo undermined fair competition by banning restaurant owners from voluntarily setting prices.
The food-delivery app Yogiyo, owned by Germany’s Delivery Hero, is South Korea’s second-largest.
Delivery Hero’s Korean unit expressed regrets over the FTC’s ruling, saying that the commission scheme was abolished after the regulator began a probe into the company.
Late last year, the German firm struck a deal to acquire an 87 percent stake in Woowa Brothers, which operates the nation’s largest food-delivery app Baedal Minjok, or Baemin, from existing investors, including Goldman Sachs and Singaporean fund GIC.
In April, Baemin came under fire for changing its commission scheme, with critics saying it would place a heavier burden on restaurants hit hard by the coronavirus pandemic.
At that time, Baemin began to charge restaurant owners and franchisees a 5.8 percent commission for every online order. Previously, the fixed monthly commission was $72.
The change sparked a strong backlash from restaurant owners and franchisees, prompting Baemin to retract the new scheme.
The combined users of Yogiyo and Baemin account for some 98 percent of all users of food delivery-related apps in South Korea, triggering concerns that the megadeal could hamper competition in the fast-growing market.
South Korea’s food-delivery app market reached $8.2 billion in 2018.
Questions & Answers
Q.What specifically did Yogiyo do to exploit its dominant market position?
What specifically did Yogiyo do to exploit its dominant market position?
Yogiyo introduced a scheme between 2013 and 2016 to prevent contracted restaurants from selling food at lower prices through other apps. It also offered customers refunds if its prices were higher elsewhere.
Q.Who owns Yogiyo, and what other significant acquisition has that owner recently made?
Who owns Yogiyo, and what other significant acquisition has that owner recently made?
Yogiyo is owned by Germany’s Delivery Hero. The German firm recently agreed to acquire an 87 percent stake in Woowa Brothers, which operates South Korea’s largest food-delivery app, Baemin.
Q.What impact could the acquisition of Woowa Brothers have on the South Korean food delivery market?
What impact could the acquisition of Woowa Brothers have on the South Korean food delivery market?
The acquisition could hamper competition in the market, as the combined users of Yogiyo and Baemin account for about 98 percent of all food delivery app users in South Korea.