Food-delivery power pair to change ways after monopoly claim

Stacy Shi

Dominant online food delivery platforms Foodpanda and Deliveroo said they will amend their agreements with restaurants after the Competition Commission pointed out they could be acting as monopolies.

The agreements include charging restaurants a lower commission rate if they work exclusively with either of them and restricting and penalizing eateries if they switch from exclusive partnerships.

The two platforms prevent restaurants from offering consumers lower menu prices on their direct channels and competing online platforms, while Foodpanda requires restaurants to use its order-to-pickup services, in which consumers place an order and pick up takeaway at the restaurant themselves.

Given that Foodpanda and Deliveroo each have a degree of market power in the online food delivery space, which collectively hold over 90 percent of market share, "the conditions may hinder entry and expansion by new or smaller platforms and soften competition in the market," a commission spokeswoman said.

To address the concerns of the commission, both platforms offered to amend the terms of their exclusive partnerships so that restaurants can link up with new and smaller platforms without losing their partnership incentives with Foodpanda or Deliveroo.

Restaurants can switch from working exclusively with either platform to partnering with other online food-delivery platforms with ease and charging lower menu prices on their channels and other delivery platforms.

Additionally, Foodpanda has offered restaurants the freedom of whether or not to use its order-to-pickup services.

The commission will later decide whether to accept their commitments. Interested parties can submit representations on the proposed commitments no later than June 15.

Once the commitments are accepted, the two platforms will have 90 days to amend and notify the partner restaurants. These will be valid for three years.

The spokeswoman said they are not interfering with the market or targeting large platforms, but "hoping to create a more level competitive environment, especially for smaller platforms."

A Deliveroo spokesman said they have been cooperating fully and constructively with the commission and are committed to supporting all parties involved, including restaurants, riders and consumers.

"We aim to provide our consumers with the best selection of food at great value through an excellent delivery experience. We also aim to support our partners' growth by enabling them to reach new consumers through online delivery and provide bespoke tools and services to support their businesses," he added.

A Foodpanda spokesman said: "We have cooperated and will continue to cooperate with the Competition Commission to the best of our ability."

Catering veteran Simon Wong Ka-wo said smaller platforms have narrow development space amid the dominance of the two platforms and that mainland delivery giant Meituan entering Hong Kong could lead to healthy competition.

stacy.shi@singtaonewscorp.com