Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Korea widening regulatory pressure on Baemin, Coupang Eats
Delivery scooters for Baemin, the nation's most influential food delivery platform, are parked in Seoul in this undated 2022 file photo. Yonhap
By Lee Min-hyung
Korea’s major food delivery service operators — including Baemin and Coupang Eats — face increasing regulatory pressure amid President Lee Jae-myung’s special order to increase investigative manpower for the nation’s antitrust watchdog.
Lee has displayed concern over the excessive level of commissions charged by platforms on their partner stores' sales activities. He expressed the need to “drastically reform” the commission systems of delivery app operators when he was a presidential candidate, saying the burden of the commission threatens the livelihood of the self-employed.
The Fair Trade Commission (FTC) is the authority for the regulatory drive. The watchdog has already underscored the importance of building a fair market environment by regulating influential platforms as part of its major policy initiatives for 2025.
Likely to fall within the FTC’s scope are Baemin and Coupang Eats, the two leading food delivery apps in Korea, with 21.69 million and 10.89 million monthly active users, respectively, as of April, according to data from market tracker Wiseapp Retail Goods.
Last year, Baemin came under scrutiny by the FTC after increasing its commission to 9.8 percent of food prices — a burden that is shifted onto restaurant owners.
Restaurant owners are crying foul over delivery fees ranging from 1,900 to 3,400 won per order, saying that total commission charges, including all related fees, amount to as much as 30 to 40 percent of the food price.
After Lee called for tighter regulatory measures to reduce the influence of the platforms, restaurant owners now hope the new government will employ practical measures to curb fees.
One of Lee’s pledges was to mandate an upper limit for commissions so the platforms cannot engage in unfair business acts such as excessive commission hikes.
However, officials from the industry argue the government’s excessive intervention may end up distorting the market and hampering healthy growth.
“The market price is determined by demand and supply, but any undue regulatory pressure will shrink the appetite for investment from industry players,” an official from the industry said. “However, we need to hold more dialogue with the government and our partners to find the best possible middle ground.”