Korea Fair Trade Commission (FTC) said on Tuesday that it fined Delivery Hero Korea‘s Yogiyo to pay a fine of 468 million won ($382,000) over price-fixing and apparent abuse of power.
In November 2011, Delivery Hero, a German-based delivery platform, introduced the Yogiyo online delivery app. The platform has since been in operation in August 2012 under Delivery Hero Korea, allowing users to order food from different restaurants.
Yogiyo has the second largest market share of 26 percent in South Korea following Baemin, which Delivery Hero acquired last year.
According to the antitrust regulator, the decision to fine Yogiyo came after the company canceled contracts with restaurants after refusing to comply with company terms. The KFTC said that Yogiyo required restaurants that registered with its platform to abide by its “minimum price guarantee policy.”
Yogiyo required its 144 partner restaurants to lower their prices in the Yogiyo app while increasing rates for competitor apps and their delivery charges. From July 2013 to December 2016, Yogiyo canceled the contracts of 43 restaurants that violated its conditions.
Song Jung-won, head of FTC’s competition department in Seoul, stated that Yogiyo took advantage of its position to intervene in the business transactions of its member restaurants. Yogiyo disregarded the right of free pricing resulting in a penalty of 468 million won ($382,000).
A Statement for Online Platforms
The FTC would intensify its guidelines and policies on the online platform’s unjust interference of business transactions to monitor illegal activities that may occur through the platform consistently. The department would issue its regulation guidelines by 2021.
Cho Hong-sun, head of the FTC Seoul office, announced that the online platform’s initial case of management intervention came from the online delivery app, exploiting its power through commanding the market pricing of registered restaurants.
The recent ruling extended by the FTC to Delivery Hero made a huge statement that even big companies can be sanctioned over unfair interference in the management of small restaurants.
Delivery Hero Korea said that the company immediately discontinued its pricing policy after FTC started its investigation in 2016. The company cooperated with the investigation and justified its policy thoroughly with FTC.
Meanwhile, Delivery Hero Korea released a statement arguing that the implemented minimum price guarantee policy aimed to protect consumers.
DH Korea expressed its disappointment with the FTC ruling, saying that it immediately stopped the problematic policy after the authorities began the investigation in 2016. The company added that it has since been cooperative in the regulator’s investigation proceedings.
