On Monday, South Korean restaurant owners expressed concern over food delivery giant Delivery Hero’s $4 billion planned acquisition of its local rival, Woowa Brothers, subject to regulatory approval.
The move could undermine competition and lead to higher fees feel South Korean restaurant owners.
In December 2019, Delivery Hero, the second-largest food delivery app operator in South Korea, stated it had agreed to acquire its larger rival, which is backed by Goldman Sachs.
The deal, subject to antitrust scrutiny, would create an entity with a combined market share of nearly 99% in the food delivery apps market, according to data from mobile big data platform IGAWorks.
Restaurant owners, who are already having to deal a slowing economy, fear that the dominant player could raise the commission amount that it charges for taking orders via their apps.
“The biggest problem is that the companies can move the market to whatever direction they want to,” said Kim Kyung-moo, who runs a franchise restaurant, at a news conference at the parliament.
Restaurant owners, lawmakers and food delivery riders have urged South Korea’s fair trade commission to thoroughly review the potential merger, which they fear could also limit consumer choices.
According to Woowa Brother’s spokesman the firm is not planning on increasing commission fees.
With a high population density and usage of smartphones, South Korea is the world’s fourth biggest market for online food orders and has an annual turnover of $5.9 billion.
Last week, Berlin-bgased Delivery Hero had submitted an application to the Korea Fair Trade Commission (KFTC) for an approval for the acquisition, said an official at the antitrust regulator while declining to comment further since the review process is on.