Woowa Brothers founder and Delivery Hero CEO to attend National Assembly inspection
Woowa Brothers founder Kim Bong-jin. / Korea times photo by Ryu Hyo-jin
By Kim Jae-heun
Woowa Brothers founder Kim Bong-jin, and Delivery Hero Korea CEO Kang Shin-bong will attend a National Assembly audit Thursday to answer questions on how food delivery service firms will seek mutual growth with small business owners.
The two leaders were selected as witnesses by the Trade, Industry, Energy, SMEs, And Startups Committee to speak during the government audit of the Ministry of SMEs and Startups. They were summoned for an earlier audit in 2018 as representatives of two leading food delivery players in the local market.
Woowa Brothers and Delivery Hero operate Baedal Minjok (Baemin) and Yogiyo, respectively. They are the dominant players with more than a 90 percent market share when combined.
Once the government approves a proposed billion-dollar merger between the two firms, the merged entity will have “absolute power” over restaurant owners who develop their businesses using Baemin and Yogiyo.
Woowa Brothers was already under scrutiny in June for violating some clauses legislated by the Korea Fair Trade Commission (KFTC) in four cases. Those included unilateral breach of contract with restaurant owners, suspending certain services, and adopting a new fee system disadvantageous to its customers without notifying them.
This year, the pandemic has raised demand for food delivery services even more and a number of online platform operators have been reported for allegedly making “unfair” profits from the situation.
Delivery Hero Korea CEO Kang Shin-bong speaks at a press conference at the company's headquarters in Seocho, Seoul. / Courtesy of Delivery Hero Korea
Kim and Kang are also expected to be questioned about the planned acquisition deal that has been under KFTC review since last December. Whether the government will approve the merger of the two firms is expected to be revealed in the next two months, so the two leaders' remarks during the audit could have some impact.
“Issues related to food delivery services, open markets and e-commerce will be talked over mainly during this National Assembly inspection. Many companies are worried about being called upon and speaking in front of the public,” an industry source said.
Woowa Brothers CEO Kim Beom-joon and eBay Korea CEO Byun Kwang-yun will also be summoned as witnesses the same day.
They will be questioned about their management and supervision of marks-of-origin regulations on agricultural and marine products sold on their platforms.
Other witnesses said to be taking part in the government audit are Amorepacific Group Chairman Suh Kyung-bae and Able C&C President Lee Kwang-yeol, who have allegedly caused conflict with their cosmetic shop franchisers.
As people moved to shop for make-up online, sales of cosmetics stores decreased and franchisers argue that Amorepacific and Able C&C have ignored their difficulties and done nothing to improve their situation.
Most witness will arrive for the inspection on the day, but the names on the list could change.
“It is obviously not a comfortable place to be, but leaders will appear to speak frankly on behalf of the companies to give explanations on particular matters,” the source said.