[일문일답]Cho Seong-wook “For innovation, it is desirable to maintain the competitive landscape for delivery apps.”

Fair Trade Commissioner Cho Sung-wook is giving a briefing on the results of the Deliverable People-Yogiyo business combination at the Sejong Government Complex on the 28th. Provided by the FTC.

[세종=이데일리 한광범 기자] Regarding the fact that the Fair Trade Commission imposed a condition for the sale of Yogiyo for the acquisition of Delivery Hero (DH)’s graceful brothers (Delivery People’s Operator) on the 28th, Fair Trade Commissioner Sungwook Cho said, “It is important to maintain the competitive structure in the delivery app market. It is desirable” he stressed.

Chairman Cho said in a briefing held at the Government Complex Sejong on that day, saying, “To achieve innovation through competition, it was determined that it is correct to allow business combinations while at least maintaining the current competitive structure.”

Regarding’the possibility of DH’s dissatisfaction’, he said, “If the purpose of the merger is not to pursue monopoly profits, but to create synergy by combining strengths, we expect DH to accept conditional approval.”

Chairman Cho emphasized that’the market characteristics are different’ when asked’the difference between eBay Korea’s acquisition of Gmarket in the past’. He pointed out that “the delivery app market has not had a market share of more than 5% except Baemin and Yogiyo in the past 10 years.”

Regarding the point that the recent growth of Coupangitz was not reflected, he stressed that “there was not enough grounds for whether it could exert competitive pressure against the people of delivery at a national scale.”

The following are the questions and answers of Chairman Cho.

-How did the controversy over raising the shipper’s fees in April of this year influenced the decision?

△ As a result of empirical analysis, there was a substantial increase in fees. The FTC decided that the commission rate could be increased substantially if the company merges.

△ Bae Young-soo, policy officer for market structure improvement = Looking at the intention of reorganization, it was judged that it was a price hike that abused market power. There was a side of decreasing consumer discount rather than commission itself.

-Are there any cases in which the respondent did not accept the conditional approval condition?

△Even if the sale is a conditional combination, synergies from the combination can be obtained, so it is expected that DH will accept the conditional approval.

△ Youngsoo Bae, Policy Officer: Generally, there is a tendency to accept an order to sell assets. If you do not accept this, you can give up the business combination itself. Otherwise, a large amount of compulsory performance may be imposed.

-It is called conditional approval, but there is also a view that’in fact, it is not allowed’.

△ If the purpose of the merger is not to pursue monopoly profit, but to create synergy by combining strengths, DH is also expected to accept conditional approval.

-Is there a case in which the sale of the entire specific business was conditional upon approval of a business combination?

△ There have been three cases in which M&A was reviewed and the sale of some business by the acquirers was conditionally approved as a corrective measure.

△ Young-soo Bae, Policy Officer = There are not many cases where the second largest company takes over. There are occasional cases of selling some of the assets of the second largest company and selling related business units in the US as well as in Korea.

-When eBay approved the acquisition of Gmarket, the reason was that the barrier to entry to the online market was low. Some other reason.

△ Although the appearance was similar to that of the time, such as market share, it was different in market characteristics. In the case of eBay-G Market, there were concerns that competition was restricted only in the open market market in terms of sellers, but in the case of delivery apps, it was judged that there were concerns about competition restrictions in terms of restaurants and consumers.

Market dynamics are also different. At that time, G Market surpassed Auction and rose to the top, but in the last 10 years, except for Bae Min and Yogiyo, there were no operators with a market share of more than 5%.

△ In the case of open markets, the proportion of inflow through search was over 80%, but in the case of delivery apps, inflow through portals was less than 1%. In the case of the open market, it was easy for portal operators to enter the market, but the competitiveness of the portal’s delivery app was considerably lower.

-It is said that the share has been fixed, but the delivery app market has doubled every year for two years. I doubt the view that it is a stagnant market.

△ We know that Coupang Itz is growing rapidly in some parts of Seoul recently. Nevertheless, there is not enough evidence for whether to exert competitive pressure against the people of delivery on a national scale.

In the case of a specific company that the industry expects to enter the delivery app market, it is judged that it is difficult considering various contract conditions.

-Due to the nature of the delivery app market, it starts in the local market. Coupang Itz is on the same growth trajectory as other delivery apps. Isn’t the Fair Trade Commission seeing the market too narrowly?

△ Coupang Itz has grown rapidly in Gangnam, but it is expected that there will be obstacles to growth in other regions.

-You pointed out that there is a possibility that competitors may not be able to enter the market due to the information asset gap. What is the basis?

△ It was judged that if the information was collected and became big data, and used for marketing or new business, it could have a competitive effect.

△ Young-Soo Bae, Policy Officer: If you use the accumulated data to target customers, it can be very difficult for competitors to grow. If competition for restaurant maintenance marketing disappears, the quality and quantity of marketing information provided to restaurants may also decrease.

-Currently, Baemin’s market share for delivery apps is 80%. I am curious about the FTC’s position on this market structure. How much did you judge the value of Yogiyo?

△Contingent approval was granted as it was deemed desirable to maintain the competitive structure. In order to achieve innovation through competition, it was considered correct to allow business combinations while at least maintaining the current competitive structure. The corporate values ​​of Bae Min and Yogi-yo were not analyzed by the FTC.