Skip to content

Delivery Hero's M&A Faces Regulatory Hurdles Amid Monopoly Concerns in South Korea

Photo by Kaleidico / Unsplash

The Fair Trade Commission (FTC) in South Korea has raised concerns about the proposed merger and acquisition (M&A) between food delivery giants Baedal Minjok and Yogiyo, both owned by Delivery Hero.

According to eDaily, the FTC has sent an M&A review report to Delivery Hero, suggesting that structural measures are needed for the acquisition.

To prevent monopolistic side effects, the FTC may order Delivery Hero to change its ownership structure by divesting or selling shares within its companies.

This step is aimed at maintaining market competitiveness.

As of September 2020, Delivery Hero-owned companies held a 90.9 percent market share in South Korea, according to Nielsen's Korean click statistics.

Meanwhile, newcomers CoupangEats by Coupang and WeMakePrice O by WeMakePrice managed to increase their market share from 2.5 percent to 9.1 percent in nine months.

However, the FTC has internally concluded that these new players cannot effectively compete with Delivery Hero's services.

It is reported that the FTC is considering requiring Delivery Hero to sell stock or assets to remain competitive in the market.

When the deal was announced in December, Delivery Hero mentioned in a press release that the strategic rationale for the deal with Woowa Brothers was to expand its leadership in the Asian market.

The FTC believes that an artificial M&A that creates a monopoly in the food delivery market is unnecessary if the primary goal is to expand in the Asian market.

An anonymous food delivery market expert told eDaily that if the strategic rationale for the deal is indeed Asian market expansion, Delivery Hero might consider selling Yogiyo to gain FTC approval.

Following the inspector general's opinion, the FTC will meet with nine commissioners to decide the outcome.

The conference is scheduled for December 9 but could be delayed if Delivery Hero fails to provide the required documents or data correctly.