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Delivery app Yogiyo in legal battle over price guarantee policy
Delivery Hero Korea indicted under fair trade law
By Yim Hyun-suPublished : Feb. 2, 2021 - 15:53
Delivery Hero Korea, the Germany-based company behind major food delivery app Yogiyo, is facing a court battle ahead of the planned sale of its stake in the app.
South Korean prosecutors last week indicted DH Korea under the country’s monopoly regulation and fair trade act, accusing it of having coerced restaurants to offer lower prices on the Yogiyo platform than on competing platforms, according to the legal circle on Monday.
It is alleged that between July 2013 and December 2016 the firm took steps to disadvantage restaurants that failed to live up to its minimum price guarantee policy, including contract terminations. As a result, 44 restaurants lost their spots on the app.
The policy was to refund customers up to 5,000 won ($4.48) if they found any of the menu items on the app at cheaper prices elsewhere, whether on other delivery apps or by calling a restaurant to arrange delivery.
In June the Fair Trade Commission slapped the company with a fine of 468 million won.
“Yogiyo abused its superior position to interfere in the business activities of restaurants by limiting the free right of pricing,” Song Jung-won, head of the FTC’s competition division at the Seoul office, said at the time.
In response to the FTC sanctions, DH Korea previously said the minimum price guarantee policy was in place to protect consumers before it was abolished in 2017.
Despite the fine, the Ministry of SMEs and Startups filed a separate complaint in November, prompting the prosecution to launch an investigation into the matter.
The indictment comes as DH Korea seeks to unload Yogiyo in preparation for its takeover of Woowa Brothers, the company behind Yogiyo’s bigger rival and Korea’s top food delivery app, Baemin.
In December, the Korean antitrust authorities gave permission for the deal to go ahead on the condition that the company sold the second-ranked Yogiyo.
The decision came almost a year after DH asked the FTC to review the deal, which is seen as a major shake-up to the fast-growing food delivery market.
Food delivery apps have enjoyed an unprecedented surge in popularity during the coronavirus pandemic as strict social distancing rules saw people opt for takeaway over eating out.
An estimated 12.2 trillion won was spent on Baemin and Yogiyo last year, according to mobile app tracker WiseApp.
The two largest food delivery apps in the country enjoyed a 74 percent year-on-year increase in transaction volume, the estimate revealed.
By Yim Hyun-su (hyunsu@heraldcorp.com)
South Korean prosecutors last week indicted DH Korea under the country’s monopoly regulation and fair trade act, accusing it of having coerced restaurants to offer lower prices on the Yogiyo platform than on competing platforms, according to the legal circle on Monday.
It is alleged that between July 2013 and December 2016 the firm took steps to disadvantage restaurants that failed to live up to its minimum price guarantee policy, including contract terminations. As a result, 44 restaurants lost their spots on the app.
The policy was to refund customers up to 5,000 won ($4.48) if they found any of the menu items on the app at cheaper prices elsewhere, whether on other delivery apps or by calling a restaurant to arrange delivery.
In June the Fair Trade Commission slapped the company with a fine of 468 million won.
“Yogiyo abused its superior position to interfere in the business activities of restaurants by limiting the free right of pricing,” Song Jung-won, head of the FTC’s competition division at the Seoul office, said at the time.
In response to the FTC sanctions, DH Korea previously said the minimum price guarantee policy was in place to protect consumers before it was abolished in 2017.
Despite the fine, the Ministry of SMEs and Startups filed a separate complaint in November, prompting the prosecution to launch an investigation into the matter.
The indictment comes as DH Korea seeks to unload Yogiyo in preparation for its takeover of Woowa Brothers, the company behind Yogiyo’s bigger rival and Korea’s top food delivery app, Baemin.
In December, the Korean antitrust authorities gave permission for the deal to go ahead on the condition that the company sold the second-ranked Yogiyo.
The decision came almost a year after DH asked the FTC to review the deal, which is seen as a major shake-up to the fast-growing food delivery market.
Food delivery apps have enjoyed an unprecedented surge in popularity during the coronavirus pandemic as strict social distancing rules saw people opt for takeaway over eating out.
An estimated 12.2 trillion won was spent on Baemin and Yogiyo last year, according to mobile app tracker WiseApp.
The two largest food delivery apps in the country enjoyed a 74 percent year-on-year increase in transaction volume, the estimate revealed.
By Yim Hyun-su (hyunsu@heraldcorp.com)
