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The domestic dinosaur delivery app was not finally born. The Fair Trade Commission (hereinafter the Fair Trade Commission) told Delivery Heroes (hereinafter DH) to let go of Yogiyo’s hand to hug the delivery people.
As a result of the review of the business combination conducted by DH and his graceful brothers since last year, DH must sell Yogiyo and Delivery Box within six months. In fact, it is the same content as the audit report provided to DH by the FTC last month.
Opinions are divided in the industry on this as well. On the one hand, the FTC’s judgment was correct, saying that the combination of Baemin and Yogiyo would limit competition in the market. On the other hand, the other side claims that it has hindered the growth of startups without looking to the future.
DH and Elegant Brothers business structure <자료제공=공정위>
According to industry sources on the 29th, the FTC held a plenary session on the 23rd and conditionally approved a business combination in which DH acquires about 88% of the shares of elegant brothers. However, considering that the business combination between the two companies would have a great impact on various stakeholders, such as restaurants, consumers and delivery men, DH ordered to sell all the shares of DH Korea.
Along with this, it ordered to maintain the current state until the sale of the participation was finalized, in order to avoid a decrease in competitiveness such as the quality of Yogiyo’s service. In other words, it is impossible to combine Yogiyo with other delivery apps or try to change or induce, and the delivery app connection and screen composition must be maintained.
◇ FTC, “When Baemin-Yogiyo is combined, there are enough elements to limit competition”
It is discussed that the FTC has determined that the combination of Bae Min and Yogi-yo is likely to limit competition in the delivery application market.
The market share of DH and its handsome brothers is 99.2%, which meets the estimation requirements for limited competition. According to Article 7 (4) of the Fair Trade Law, if a specific company occupies △ 50% or more of the market share and △ the gap in market share between 1st and 2nd place is more than 25 %, it is considered that it meets the requirements for estimating restriction of competition.
Looking at the market share based on last year’s transaction amount, △ Baemin 78% △ Yogiyo (DH) 19.6% △ Delivery Box (DH) 1.3% △ Foodfly (DH) 0.3%.
Furthermore, the absence of new operators that could threaten them in the last five years is also a requirement to estimate the restrictions to competition. Of course, Coupang Itz has made progress recently, but this is limited to the metropolitan area and the market share is less than 5% by national standards.
Consequently, the FTC explained that if the element of competition disappears when the two companies combine, there is concern that anti-competitive behavior such as △ reduced consumer benefits and △ increased restaurant fees may occur.
In addition, he pointed to the problem of transferring the domain to related markets such as delivery agencies and shared kitchens. If both companies give preferential treatment to restaurants that use their own delivery agency service in order to dominate the delivery agency market, it could undermine the competitiveness of other companies.
The market share of both companies in the domestic food delivery agency market is approximately 20% based on the number of deliveries, ranking third in the industry. Also, as expected, the total was 80.2%, including Barogo, Vureung and Coupang.
By the same logic, if both companies impose benefits only on restaurants that have entered the store in order to make a profit from shared kitchens, it could hamper fair competition. Currently, the stylish brothers are operating a shared kitchen in Korea under the name ‘Baemin Kitchen’. Given that DH is operating a shared kitchen business abroad, it is analyzed that the possibility of entering the domestic market is sufficient.
The FTC said: “This move has kept Bae Min and Yogi-yo competitive relationship, thereby enhancing consumer welfare in the market related to delivery applications and maintaining the basis for promoting mutual innovation competition.” It is significant because it allows us to achieve synergies through cooperation between our companies by allowing them to combine ”.
On the 28th, DH also issued an official statement. DH said, “We respect the FTC’s decision, but we are very sorry for the difficult decision of having to sell DH Korea to combine business with elegant brothers.” It is expected to take some time. “
In light of this, the industry predicts that DH will not pursue an administrative lawsuit. It is argued that this is because it takes several years to proceed to administrative litigation, and consequently, the real benefit of M&A is reduced.
On the same day, the graceful brothers said, “With this business combination, we will do our best to pioneer the Asian market and become a world-expanding company based on Baemin’s successful experience in Korea.” “We will be a responsible company that delivers more benefits to consumers, restaurant owners and passengers alike and contributes to job creation while continuing to pursue ” s vision.”
◇ Diversified Industry Reactions, “Convinced FTC Decision” vs. “Growth Inhibition of Startups”
The platform industries and startups also responded to the FTC’s decision.
First, there are opinions that the FTC’s decision to sell Yogiyo was inevitable. This is because the combination of Baemin and Yogiyo at this point has a clear monopoly.
An industry insider said: “In a situation where a specific operator occupies more than 95% of the market share, fair trade cannot be guaranteed.” “As today’s market for delivery applications is growing, new entrants may appear in the long term, but this is not an easy task. Said.
On the other hand, some argued that the decision of the Fair Trade Commission prevented the growth of startups. Representatively, the Korea Start Forum issued a statement critical of the FTC’s decision. It is a decision to ignore the dynamics of the digital economy, such as open trade companies entering the food delivery market and the online video service market, and online video service providers entering the commerce market. Live.
Cospo said: “The combination of Elegant Brothers, a leading domestic unicorn company, and DH, a global company, was the largest merger and acquisition of start-ups in Korea and an important milestone for overseas expansion.” Not only did it hurt, but it also caused huge losses in overseas expansion. ”
Another industry insider also said: “The combination of Baemin and Yogiyo should look to the future rather than immediate market share.” “In a situation where competition is intensifying, such as the market for delivery applications growing in size, consumers end up providing better services. “This will lead to companies developing better services through competition, which in turn will have a positive impact on the market.”
Meanwhile, DH decided to take over Baemin on December 13 of last year for 475 billion won (88% of the fancy brothers), and submitted a combined review report to the Fair Trade Commission on the 30th of the same month. With the decision of the Fair Trade Commission, Delivery Hero must sell the entire stake in DH Korea, which Yogiyo operates, to a third party within 6 months, but may request an extension if unavoidable circumstances are recognized.
[CEO스코어데일리 / 조문영 기자 / [email protected]]
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