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| Korea Fair Trade Commission Chairperson Joh Sung-wook speaks at the State Affairs Committee meeting held at the National Assembly on Yeouido, Seoul, Monday. / Korea Times photo by Oh Dae-keun |
By Kim Jae-heun
The Korea Fair Trade Commission (KFTC) has almost finished its preliminary review of Woowa Brothers and Delivery Hero's $4 billion deal.
The antitrust watchdog has commissioned the Korea Academic Society of Industrial Organization (KASIO) to study the acquisition deal between the two parties and the study is scheduled to be completed by the end of October.
The KFTC then plans to examine the research in November and submit it to commissioners ahead of its meeting in December for a final decision on whether or not to approve the deal. The country's top antitrust regulator declined to comment, saying only that it will take into consideration the results of KASIO's research and its own examination in the final decision.
The biggest concern for the KFTC in this review is whether the combination of the two firms will lead to a market monopoly.
The watchdog will not allow Woowa Brothers and Delivery Hero to dominate the market and fix the prices of products and services to prevent competition.
When the two companies revealed their merger deal last December, concerns about the potential for a market monopoly and price hikes for delivery services quickly arose.
Woowa Brothers and Delivery Hero operate the top three food delivery players here and had over 98.7 percent of the market at the time the deal was announced. Woowa Brothers owns No.1 player Baedal Minjok (Baemin) and Delivery Hero has the No.2 and No.3 players Yogiyo and Baedaltong.
According to the mobile big data platform IGAWorks, Baemin had the most users at 8.85 million, followed by Yogiyo with 4.9 million, Baedaltong with 437,613 and Coupang Eats with 184,419 in November.
However, in just over nine months, Coupang Eats is now ahead of Baedaltong. IGAWorks' new data from August showed Coupang's food delivery service has grown quickly to have 748,322 users while Baedaltong had 272,757 users.
Another player, WeMakePrice O, launched by local e-commerce firm WeMakePrice, is attracting a huge number of business partners and users to its platform with its no commission fee.
As a result, the delivery service application's gross value in May skyrocketed by 1263 percent compared to the same month in 2019 and its users soared by 600 percent in August.
Coupang Eats and WeMakePrice O still have a long way to go if they are to catch up to Baemin and Yogiyo, which had 10.66 million and 5.31 million users, respectively, in the recently updated IGAWorks' data.
However, their big steps to challenge the dominance of Baemin and Yogiyo suggest that the KFTC's concern over the combination of Woowa Brothers and Delivery Hero might not be a serious one.
Knowing this, Woowa Brothers has been emphasizing that it continues to be challenged by many players including Coupang and Naver.
"We never think that we have dominated the market and the rank can change anytime," a Woowa Brothers official said.
