Baeman accused of monopolistic behaviour as merger looms

The pending merger between South Korea’s number one food-delivery app Baedal Minjok (Baemin), and Yogiyo, the industry’s second largest player, has fuelled widespread concerns about monopolistic market behaviour.

In particular, recent changes to Baemin’s fee system from a flat rate to a per-payment method has sparked controversy, raising concerns over such a monopoly.

Woowa Brothers, Baemin’s owner, has apologised for causing controversy over the “open service” fee system.

“Woowa Brothers humbly accept the criticism that we introduced the new fee system without considering the difficult situation of the restaurant owners, hit by the Covid-19 outbreak,” management said in a statement.

Starting this month, the delivery service will apply a 5.8 per cent per-payment fee to restaurants for food orders. The system is designed to replace the current monthly fixed amount system, which costs 88,000 won (US$71.90) per month.

This will result in 5.8 per cent of sales being taken by Baemin as commission from this month.

However, small business owners say the changes are not for small businesses.

According to the Korea Federation of Micro Enterprise, stores with monthly sales of 1.55 million won (US$1267) or less are eligible for lower fees due to the new policy.

An employee of Baemin (Baedal Minjok) Rider. (Yonhap)

An employee of Baemin (Baedal Minjok) Rider. (image: Yonhap)

Some self-employed people raised the issue, saying that the fees paid to Baemin are excessive compared to the past.

Gyeonggi Province Gov Lee Jae-myeong openly criticised the company, citing “the tyranny of monopoly,” and targeting Baemin on his social-media account.

The controversy is continuing as politicians and consumer groups joined the campaign. A recent survey by Consumers Korea showed that 86.4 per cent of consumers oppose the merger of Baemin and Yogiyo.

The survey also showed that Baemin accounts for 59.2 per cent of delivery apps, with Yogiyo another 35.6 per cent, suggesting a combined 94.8 per cent for the two companies post merger.

The biggest reason for the opposition to the merger was, “food prices and delivery fees rising due to the formation of an exclusive market,” cited by 82.9 per cent of respondents.

The decrease in incentives for business innovation or service improvement followed at 46.3 per cent, reduction in consumer benefits such as coupons and events came in at 40.5 per cent.

D M Park writes for Korea Bizwire.

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