Price competition can only thrive if food can be sold at lower prices on delivery apps with lower fees. This allows store owners to reduce costs and gives consumers better choices. The Fair Trade Commission intervened to prevent trading conditions that block this pathway. On November 9, it announced a provisional fine of 631.9 billion won against Baedal Minjok and Coupang Eats, marking the largest fine ever in the delivery app sector.
The core of this sanction is the most-favored-nation clause demanded by the two companies from their partner merchants. They required that menu prices and minimum order amounts be set to match those of competing apps or be more favorable to their own app. If store owners wanted to lower food prices on apps with lower fees, they had to reduce prices on larger apps as well. Failure to comply resulted in exclusion from membership benefits that attracted orders. This created a structure where store owners could not freely set trading conditions.
In such a market, smaller apps struggle to differentiate themselves on price, even if they lower fees. This is because the path for cost-saving store owners to pass benefits to consumers is narrowed. The decision reflects concerns that the practices of large platforms managing trading conditions within their own ecosystems can restrict price competition from rivals. The Fair Trade Commission's accountability for the most-favored-nation demands from oligopolistic operators is significant.
However, it is premature to evaluate the size of the fine as an immediate success in restoring competition. The Fair Trade Commission began its investigation in July 2024 and decided on sanctions in October of this year, taking about two years and three months. The agency explained that time was needed for the agreement process, cancellations, return to substantive review, and ensuring the rights of the operators to defend themselves. While legal procedures are important, market changes must also be monitored during this process.
The combined market share of the two companies based on order amounts increased from 88.10% in 2023 to 92.89% last year. The market has tilted further toward a duopoly. Considering the tendency for orders to concentrate on platforms with many users and store owners, simply removing restrictive clauses will not immediately restore the competitiveness of smaller apps. The costs already borne by store owners and the lost choices for consumers cannot be reversed by imposing fines alone.
The effectiveness of the corrective orders must also be verified. It is not enough to check whether the most-favored-nation clause has disappeared from contracts. It is essential to examine whether store owners face disadvantages in membership or visibility when offering lower prices on other apps. There is a need to monitor trading practices to ensure that similar restrictions do not re-emerge under different conditions, as well as to track the actual burdens on store owners and changes in consumer prices alongside nominal fees.
Conditions for restoring competition must also be established. Relying solely on discount coupons for public and smaller apps will not retain users for long. Store owners should be able to freely use multiple apps, and new entrants should be able to compete on price and service. Factors that hinder cooperation among smaller operators and service improvements, as well as the entry of new private businesses, should also be examined. The effectiveness of support should be assessed based on whether sustainable alternatives have emerged that store owners and consumers are willing to choose.
This case highlights the need for the Fair Trade Commission to improve its response speed. In markets with high concentration and rapid suppression of competitors, it is crucial to focus investigative and economic analysis capabilities. While waiting for voluntary corrections, it is necessary to continuously monitor whether competition is being harmed and to ensure that swift legal enforcement follows when agreements are not reached. There is also a need to review procedures that can quickly prevent the spread of harm while ensuring the rights of operators to defend themselves.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.