South Korea's FTC Rejects Food Delivery Platforms' Corrective Measures

By Kang Yoon-seung

SEJONG, June 18 (Yonhap) -- South Korea's fair trade watchdog on Thursday rejected proposed corrective measures submitted by two major food delivery platforms over allegations that they abused their market dominance against restaurant owners and consumers.

The Fair Trade Commission (FTC) said it decided to reject the proposals submitted by Woowa Brothers Corp. and Coupang Corp., which operate Baedal Minjok, widely known as Baemin, and Coupang Eats, respectively, after the companies sought a consent decree that would have ended the case without further legal proceedings.

Woowa Brothers and Coupang filed for the consent decree earlier this year after the FTC concluded that the two companies had unfairly required restaurant operators to grant them "most-favored" treatment.

The FTC said the platforms excluded restaurants that failed to comply with the requirement from membership-linked programs offering benefits, such as free delivery, to paid users.

The watchdog also found that Woowa Brothers gave preferential exposure to restaurants using its affiliated delivery riders over those hiring couriers directly, effectively pressuring restaurant operators to use its services.

The Baemin platform also engaged in deceptive advertising by portraying its direct delivery service as faster than competing delivery options.

Under the voluntary corrective measures, Woowa Brothers proposed lowering commission fees for restaurants and providing a combined 300 billion won (US$196 million) worth of support measures over the next three years. It also pledged not to require restaurants to provide most-favored treatment.

Coupang also proposed investing 60 billion won over the next four years to financially support restaurants, along with similar corrective actions.

The FTC, however, ruled that the proposals by the two companies did not meet the requirements for initiating consent decree procedures, noting that a significant number of restaurants and consumers were affected by the alleged violations.

Industry watchers said the FTC's decision came as the two companies' voluntary measures were deemed insufficient to promptly remedy the effects of their alleged wrongdoing.

Pundits had earlier estimated fines on Woowa Brothers and Coupang at 730 billion won and 710 billion won, respectively, based solely on the allegations that they had required most-favored treatment.