Delivery Hero confident of persuading FTC

Yogiyo scooters are parked in front of Delivery Hero's office in Seoul, June 2. / Yonhap

By Kim Jae-heun

Delivery Hero remains confident of persuading the Korea Fair Trade Commission (KFTC) to approve its acquisition of Woowa Brothers without selling its food delivery player Yogiyo.

The antitrust watchdog recently sent an examiner's report to Delivery Hero's headquarters in Germany, requesting the divestment of Yogiyo as a condition of its approval of the Woowa Brothers takeover. However, the German firm made it clear it will not comply.

“We do not agree with the KFTC's recommendation to sell off our food delivery player and we will object during the antitrust watchdog's commissioners' meeting on Dec. 9,” a Delivery Hero official said. “We are confident that we can persuade the commissioners to approve our acquisition of Woowa Brothers.”

Delivery Hero will emphasize three points in its bid to convince the KFTC. First, it believes preventing the combination of the two firms will limit customers' opportunities to enjoy better services.

“When we merge with Woowa Brothers, we will provide unprecedented service to all restaurant owners, deliverymen and our customers, which will benefit local communities,” the official said.

The German firm said such a recommendation from the antitrust watchdog would discourage any local “unicorn” firms from entering the global market.

When Delivery Hero and Woowa Brothers announced their merger deal last December, the two also revealed plans to launch a joint venture in Singapore to operate a food delivery service in 11 countries in the region.

Woowa Brothers' founder Kim Bong-jin is to lead the joint venture, but it would not go ahead if Delivery Hero fails to acquire the Korean firm.

Delivery Hero has been arguing that its acquisition of Woowa Brothers will not create a monopoly in the local market or limit newcomers from entering it.

Although Baedal Minjok, operated by Woowa Brothers, and Yogiyo have 90.9 percent of the food delivery market, their combined market share is down 8 percentage points from last year. Other players, including Coupang Eats and WeMakePrice O, have been growing rapidly. Coupang Eats saw its monthly active users quadruple in August compared to 2019.

Delivery Hero CEO Hiklas Ostberg said in August that the company also plans to expand into selling groceries and electronic goods to compete with local platform operators like Naver and Coupang.

Ostberg said the market is subject to quick change and it is meaningless to consider whether a company has a high market share or not.

The KFTC declined to comment.