German global delivery service company Delivery Hero (DH) will take over South Korea's top food delivery app operator, Woowa Brothers Corp. DH also runs Yogiyo and Baedaltong, the second- and third-largest domestic delivery app.
However, after DH's M&A announcement, concerns are mounting online about monopolies in the delivery app market, including a fee hike.
According to industry sources, the market share of domestic delivery apps is 55.7% for Baedal Minjok, followed by Yogiyo (33.5%), and Baedaltong (10.8%). As DH is also operating Baedaltong, the delivery app market in effect will be 100% owned by DH.
As a result, concerns and resistance from the industry and the self-employed are growing. "The unification of the delivery app market by one company will be passed on to the self-employed and consumers who are suffering from the burden of fees and advertising fees, and the German capital`s monopoly on the delivery app market in the long term," the National Association of Franchisers said on Dec. 16.
"We hope that the Fair Trade Commission will resolve the difficulties of the self-employed market as well as the current merger and acquisition screening process and solve the problem of commission fees in the delivery app market," it pointed out.
Rider Union, a labor union of delivery workers, also issued a statement on Dec. 13, saying that riders fear the merger of the two companies, which are making unilateral changes in working conditions, could hurt the riders.
Concerns have been raised that if delivery fees and various fees are raised after Baedal Minjok , Yogiyo and Baedaltong are absorbed into a company, its damage will go to consumers.
They also pointed out that if the labor union of the delivery app market strikes at the same time in solidarity, restaurants will suffer huge losses and consumers will suffer inconvenience.
Under the current fair trade law, if one of the two companies has assets or sales of more than 300 billion won and the other has assets or sales of more than 30 billion won, it will be subject to the report to the FTC in case of mergers and acquisitions.
DH's acquisition of Woowa Brothers Corp. is also subject to the review, drawing attention from related companies to the FTC's judgment.