Baemin, Coupang Eats hit with record W632b antitrust penalty

South Korea's antitrust watchdog said Monday it would impose a combined 631.9 billion won ($467 million) fine on Baemin and Coupang Eats for pressuring restaurants to match rivals' prices and terms, restricting competition.

The Fair Trade Commission announced provisional fines of 331.1 billion won for Woowa Brothers, operator of Baemin, and 300.8 billion won for Coupang, which runs Coupang Eats, alongside corrective orders. Combined, the fines mark the largest penalty ever imposed on food delivery app operators in Korea.

According to the FTC, the two platforms imposed most-favored-nation requirements that prevented restaurants from offering lower prices or more favorable minimum-order conditions on competing delivery apps.

Coupang Eats began enforcing the requirements in July 2023, followed by Baemin in May 2024. Restaurants that refused to comply risked exclusion from Coupang Eats' Wow Store or Baemin's Baemin Club, membership-linked programs offering delivery discounts to customers and greater visibility for participating restaurants.

The consequences were substantial. Average daily sales at restaurants excluded from Coupang's program fell from 220,000 won to 90,000 won. Those removed from Baemin's program saw sales decline from 110,000 won to 30,000 won, according to the regulator.

Rather than lowering prices on Coupang Eats, 75 percent of restaurants that complied with its demands worsened their terms on Baemin, the FTC found.

The watchdog said the practices undermined price competition between the platforms, which together controlled 92.89 percent of South Korea's food delivery market last year.

Baemin subsequently raised its in-house delivery commission from 6.8 percent to 9.8 percent in August 2024, matching Coupang Eats' rate. The FTC cited the increase in assessing the competitive impact of the platforms' practices.

The regulator also found that Baemin favored its own delivery service over restaurant-arranged deliveries by reducing the latter's visibility in its app and eliminating a flat-fee advertising plan.

Baemin's app portrayed restaurant-arranged deliveries as taking 13 minutes longer than its own service, although they were actually 1.4 minutes faster on average, according to the FTC.

Separately, Coupang was ordered to revise contract terms allowing commissions to be calculated on prices before discounts, including those funded by restaurants, within 60 days.

The corrective measures are intended to restore restaurants' freedom to set prices and delivery conditions independently across competing platforms.

Woowa Brothers disputed the findings, saying it had consistently explained why its practices did not violate the law and regretted that its arguments were not sufficiently accepted.

Coupang Eats defended its Wow Store policy as a measure to offer consumers reasonable prices and free delivery while helping participating restaurants increase sales.

Both companies said they would review the FTC's final written decision before deciding whether to take legal action.