Coupang Eats and Baemin protest against the Fair Trade Commission's imposition of fines... “Review of legal response” (comprehensive)

(Seoul = Yonhap News) Reporter Hong Guk-ki = The operators of Baedal Minjok and Coupang Eats, two major delivery applications (apps), protested in unison when the Fair Trade Commission announced on the 9th that it would impose the first fine of 300 billion won each on their services.

Coupang, the operator of Coupang Eats, said in a statement that day, "The essence of this incident is that our efforts to provide better service to customers were found to be illegal."

The Fair Trade Commission determined that Coupang Eats and Baemin, which have a combined market share of more than 90%, demanded 'best treatment' from stores by taking advantage of the benefits provided to 'Wow Store' and 'Baemin Club Store', respectively.

Requesting preferential treatment refers to the act of requesting that restaurants adjust menu prices, minimum order amounts, etc. to be more favorable to consumers.

In response, Coupang Eats claimed that its market share at the time it entered the delivery app market was only 7%, and that it promoted competition in a market where Baemin's market share was more than 80%, and that there was not a single unauthorized contract termination with a restaurant owner.

In addition, the issue was raised that the penalty was more than 600 times more than that of similar cases in the past, which violated fairness, and that even sales of restaurant owners unrelated to the incident were used as the standard for calculating the penalty.

Previously, Yogiyo was fined 468 million won by the Fair Trade Commission in 2020 for demanding that restaurants not sell at a higher price than other sales channels and terminating contracts with restaurants that did not comply.

In addition, Woowa Brothers, Baemin's management company, said in an official statement, "We have faithfully explained that there is no illegality in this matter," and added, "We regret that this explanation was not fully accepted."

Woowa Brothers explained that the reason for introducing Baemin's preferential treatment (Baemin Club store conditions) was that it was introduced as a minimum level of defense in a situation where the market competition structure has changed rapidly over the past year since competitor Coupang Eats introduced membership-based preferential treatment (Wow store conditions).

He added, “The majority of stores were selected as Baemin Club stores regardless of the price conditions,” and “There was no forced action, such as the platform arbitrarily changing the price conditions of the store owners.”

In the case of Baemin, charges of reducing the exposure of 'store delivery' and distorting the expected delivery time in order to expand 'self-delivery' were also included in the Fair Trade Commission's sanctions.

Woowa Brothers explained, “Self-delivery is a service where the platform is directly responsible for everything from order brokering to delivery, customer response, and accident compensation.” They added, “In order to achieve the delivery quality that consumers want, there is no choice but to move towards the platform taking responsibility for delivery, and this is a common trend in the global delivery market.”

He then emphasized that, unlike Coupang Eats, it provides both self-delivery and store delivery services, adding, "In areas where it is difficult to operate self-delivery services, store delivery alone provides business owners with the opportunity to sell delivery apps."

He also claimed, “Self-delivery has a structure in which, in addition to the delivery fee paid by the business owner, the company bears all costs such as rider costs, customer service, and accident compensation,” and added, “The profit left to the company per order is actually greater for store delivery. However, the increased proportion of self-delivery is a result of reflecting consumers’ preferences according to delivery quality.”

The two companies plan to review the Fair Trade Commission's resolution and confirm the final response plan, including legal procedures.