Baedal Minjok, restaurant owners on collision course
Korea Federation of Micro Enterprises (KFME) officials and Rep. Choo Hye-sun of the minor Justice Party, fourth from right, protest Delivery Hero's takeover of Baedal Minjok at the National Assembly, Friday. / Yonhap
By Kwak Yeon-soo
Small business owners denounced Delivery Hero's (DH) takeover of Baedal Minjok Friday, arguing Korea's largest food delivery app will exercise greater monopolistic power and hurt restaurant owners and other self-employed people.
On Friday, the Korea Federation of Micro Enterprises (KFME) held a joint press conference at the National Assembly with Rep. Choo Hye-sun of the minor Justice Party, accusing DH of undermining its smaller rivals.
“We strongly oppose DH's acquisition of Woowa Brothers, operator of Baedal Minjok, as it is likely to impose a heavier burden on small businesses and limit consumer choice,” a KFME official said.
“If Baedal Minjok raises commissions and advertising fees, we will take collective action that includes boycotting the delivery app.”
The KFME also urged the Fair Trade Commission (FTC) to run an in-depth review of the latest deal.
Rep. Choo expressed concerns over DH's attempt to monopolize the domestic delivery app market.
“The latest merger and acquisition (M&A) will leave DH to account for 95 percent of the delivery app market,” Choo said. “Raising all sorts of fees and putting riders into more dangerous working conditions could become a reality.”
The users of Baedal Minjok, Yogiyo and Baedaltong account for 98.7 percent of all users of food delivery-related apps, according to mobile big data platform IGAWorks.
On Dec. 16, the Korea Franchisee Union (KFU) said the merger of two food delivery app companies could add more pain to the self-employed market.
“About 6.5 million self-employed workers strongly oppose market domination by a single firm,” the KFU said.
This is not the first time Baedal Minjok has clashed with the KFME. In 2015, the country's leading delivery app operator suspended commissions after facing severe criticism that self-employed workers were suffering from pressure derived from commissions.
On Dec. 12, DH announced that it would acquire an 87 percent stake in Woowa Brothers from existing investors such as Goldman Sachs and Singaporean fund GIC. It will later acquire the remaining 13 percent owned by Woowa board members. DH valued the deal at $4 billion.
The German company also operates Yogiyo and Baedaltong.
Woowa Brothers Executive Vice President Kim Bom-jun, who will become CEO of Woowa Brothers if the acquisition goes through, said the company will not raise commissions following the merger.
“Raising commissions following the merger with DH will not happen,” Kim said.
Woowa Brothers founder and CEO Kim Bong-jin told employees at a company meeting on Dec. 17: “The latest deal is the choice made as a matter of expanding overseas to become a global company, not to raise commissions.”