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| A Yogiyo employee is on his way to deliver ordered goods in Seoul. Korea Times file |
By Kim Hyun-bin
The Korea Fair Trade Commission (FTC) has imposed a 468 million won ($382,000) fine on Delivery Hero Korea, operator of the country's second-biggest delivery application, over the operator's involvement in price fixing.
German-based Delivery Hero launched the Yogiyo delivery app in November 2011, and has been in operation under Delivery Hero Korea (DHK) since August 2012.
Delivery Hero Korea banned its registered restaurants from offering customers lower rates than stated on its application, which the FTC believed was an apparent abuse of power. This is the first time a delivery application platform has been fined.
"Yogiyo has banned restaurants from offering prices lower than the rates available on its application to customers who order over the phone or through another application. Once found to have violated the terms, it led to the cancellation of the restaurant's contract and other disadvantages. We have decided to fine the company 468 million won for the act," the antitrust regulator said.
Delivery Hero Korea threatened to delete restaurants from the Yogiyo application for encouraging customers to order over the phone instead of utilizing the app, as Yogiyo receives a commission of 12.5 percent per order, the FTC said.
Delivery Hero Korea established a sales improvement team to check on registered restaurants to see if they were abiding by the company pricing regulations and requested employees report any violations. The employees were also asked to pose as customers and place calls to restaurants to check their prices.
Between 2013 and 2016, Delivery Hero Korea launched a lowest-price-guarantee initiative, which compensated customers if they paid more on Yogiyo compared to its competitors. It also promoted to customers that it will provide a 300 percent refund of the price difference up to 5,000 won in the form of coupons, which was used as a means to catch restaurants that were violating their regulations.
In the three and a half years in which Yogiyo ran the lowest-price-guarantee program, it detected 144 restaurants that violated its terms. The firm told the restaurants to revise their pricing, and 43 restaurants that refused had their contracts terminated.
Customers reported 87 cases, rival restaurants reported two cases and 55 more cases were discovered through internal monitoring, the state regulator said.
The FTC will strengthen crackdowns on the online platform's unfair transactions as it established an inspection taskforce recently to better monitor any illegal activities that may occur through the platform. It is scheduled to release regulation guidelines next year.
"An online delivery application using its leverage on registered restaurants to offer the lowest prices and being involved in the price setting marks the first case of management intervention for an online platform," said Cho Hong-sun, head of the FTC Seoul office. "The local delivery application market is growing at a rapid rate and the recent ruling has great significance as it was found to be an intervention of management."
"After the FTC started its investigation in 2016, we halted the problematic policy. Since then we have been cooperative in their investigation procedures and explained our position well. We are sad to see the FTC ruling," DHK said in a statement, Tuesday.
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