Review of Delivery Hero-Woowa Brothers' deal to take longer time: KFTC
Korea Fair Trade Commission Chairperson Joh Sung-wook speaks during the confirmation hearing prior to her appointment in the current position at the National Assembly in this 2019 file photo. / Korea Times photo by Oh Dae-keun
By Kim Jae-heun
The result of the Korea Fair Trade Commission's (KFTC) review of Delivery Hero's $4 billion deal to acquire Woowa Brothers could take as long as a year.
“We have 120 days to review the merger and if we think we have not looked through enough data, we can request more time. I think we will need more time for this deal. It will take longer,” a KFTC official said.
Delivery Hero applied for a merger review from the antitrust regulator on Dec. 31, last year. Considering the 120-day deadline the KFTC's decision was expected on April 28.
Previously, the government took a little over four months to review and approve the merger of eBay Korea and G-Market.
However, the KFTC official said Delivery Hero and Woowa Brother's M&A deal needs a more comprehensive review as it could potentially limit healthy competition in the online food delivery service market.
Currently, Woowa Brothers' food delivery application Baedal Minjok (Baemin) takes up 55.7 percent of the market share. If Delivery Hero takes over Baemin, it will own almost 100 percent of the market share as it already owns No.2 player Yogiyo and No.3 player Baedaltong that comprise 33.5 percent and 10.8 percent, respectively.
“It usually doesn't take over a year. But when a merger can result in one company's dominance in the market, it takes longer than usual,” a KFTC official said.
The government is concerned about the German firm preventing newcomers from entering the market.
The KFTC said it will soon launch a task force team specializing in the information and communication technology field to check if Delivery Hero can possibly utilize big data to eliminate their potential rivals in the market.
The antitrust regulator will also consider the invasion of privacy issue as Delivery Hero could share its user's personal information with other subsidiaries including Yogiyo and Baedaltong.
An industry source said Delivery Hero paid a high price for the big data collected by Baemi, which has 25 million annual subscribers.
The KFTC Vice Chairman Ji Chul-ho also expressed concerns about Delivery Hero's takeover of Baemin users' information and monopolizing it.
As it is the first time that the KFTC is dealing with a big data issue in a corporate M&A, it is expected the regulator will need more time to analyze the deal.
Meanwhile, 86 percent of online food delivery application users opposed the German firm's acquisition of the country's No.1 player. Many are concerned that when the KFTC approves the deal, Delivery Hero could monopolize the market and raise commission fees while allowing the service quality to deteriorate.
The government said it cannot intervene in the market to fix the commission price but the KFTC said it will do its best to make sure users of the service will not suffer any damage brought about by an unfair merger.
Delivery Hero declined to comment on the issue.