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The final results of the review of the Yogi-Yo and Deliverable-ethnic business combination carried out by the Fair Trade Commission (hereinafter, the Fair Trade Commission) were confirmed as the original draft without any surprise.
‘Yogiyo’ In order for Germany-based Delivery Hero (hereafter DH) to take over and merge with Graceful Brothers (Hyung Woo), the operator of ‘People of Delivery’, it must sell 100% of its shares in Delivery Hero Korea (hereinafter DH Korea), a Korean branch.
The FTC announced on the 28th that DH had conditionally approved a business combination acquiring approximately 88% of Woohyung’s shares.
However, the FTC judged that if the two companies are combined, there is great concern about restrictions on competition affecting various stakeholders, such as restaurants, consumers, and delivery personnel (passengers). Consequently, the sale of 100% of DH’s Korean branch, DH Korea, was imposed as a condition for the approval of a business combination.
The Fair Trade Commission said, “By allowing the combination of DH and Woo Hyeong, the synergy effect could be achieved through the cooperation between the two companies. It promotes well-being and promotes competition for innovation ”.
Due to the FTC’s action, DH must sell all of DH’s shares in DH Korea to a third party within six months of receiving the corrective order. If unavoidable, the period can be extended within the range of 6 months.
In this review, the FTC considered that if a business combination was established between DH and Woo Hyung, there would be high restrictions of competition. It is analyzed that the total market share of the two companies based on last year’s transaction amount was 99.2%, ranking first, and the gap with second place (ordering Kakao) is greater than 25% p. Furthermore, the share of the two companies in the two companies has remained strong for the past five years, so ‘Coupang Itz’, which has a domestic market share of less than 5%, cannot yet become an app. competitive. Even ‘Naver Easy Order’ didn’t reach 1% of Baemin, so it couldn’t be competitive pressure.
In particular, the FTC ruled that if the competition between Baemin and Yogiyo disappeared, there would be a risk of anti-competitive conduct such as lower consumer benefits and higher restaurant fees. This is an analysis that damages can occur to consumers and restaurants. He also predicted that the competitiveness of competing delivery agencies could be undermined if restaurants that use their own delivery agency service receive preferential treatment.
The FTC said: “The delivery application market has no legal and institutional barriers to entry, so there may be a new entry possibility, but it is a field that requires considerable effort to secure consumers and restaurants in the early stages. input stages. It is not clear if it can act as pressure. “
“Increasing the number of restaurants through this business combination increases order density, shortens delivery time and increases orders, but can increase delivery time by increasing the amount of delivery per passenger.” “This can be achieved in other ways, such as expanding self-delivery or increasing passengers, with fewer restrictions on competition than combining.”
History of the DH-woo-hyeong business combination
On December 13 of last year, DH signed a contract to acquire around 88% of Elegant Brothers shares and filed a business combination report with the Fair Trade Commission on the 30th of the same month. In addition, DH also presented a plan to target the Asian market with People of Delivery by establishing a joint venture (Wua DH Asia) after obtaining a significant number of shares from the elegant brothers.
At that time, Kim Bong-jin, CEO of Elegant Brothers, decided to take on the role of overseeing the Asian market for delivery applications as president of Wha DH Asia. At that time, the corporate value assessed by the elegant brothers was approximately 4.75 trillion won.
This great business is evaluated as one of the best success stories and envy of the startup industry. It also generated expectations as an opportunity for the technology prowess and marketing knowledge of the domestic delivery application to expand to the Asian market.
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On the other hand, small business owners were concerned about the damage from the market monopoly and many users expressed disappointment at the perception that domestic companies are selling abroad. Civic groups also voiced opposition to the merger of the two companies, saying that if the competition wears off, it will eventually lead to consumer harm. Similar concerns were raised in the National Assembly.
The results of the FTC’s review, which took place after about a year of filing a business combination, were approved on the condition that DH sell DH Korea, but this in fact does not allow the combination of the two companies. This is because DH Korea, which received the same selection report last month, said it is “absolutely unacceptable” for the FTC’s business combination approval conditions.
