South Korea says Delivery Hero must sell unit for US$4b Woowa deal approval

[SEOUL] South Korea's antitrust regulator said on Monday Delivery Hero must sell its South Korean subsidiary to win approval for a US$4 billion takeover of Woowa Brothers that would have given it a near monopoly in the country's food delivery market.

The ruling from the Korea Fair Trade Commission (KFTC) is a setback for consolidation in the world's third-largest online food delivery market, as competition heats up amid accelerated demand triggered by the coronavirus pandemic.

Berlin-based Delivery Hero agreed last year to buy Korea's top food delivery app owner Woowa as it expands in Asia's fast-growing but crowded market. For Woowa, the buyout is a lifeline in an intensely competitive market.

But the KFTC said it would only approve the takeover if Delivery Hero sold its entire stake in its Korean unit, which owns the country's No 2 food delivery app Yogiyo.

KFTC said the combined market share of the entity resulting from the takeover, if the unit was not sold, would be 97 per cent of food delivery transactions as of July.

The regulator said it feared a "decrease in consumer benefits and a rise in restaurant fees" as a result of the deal as it was currently structured.

South Korea's food delivery market ranks third after China's and the United States', Euromonitor data showed, and is expected to grow 40 per cent this year to about US$15.4 billion.

The number of delivery app users exceeded 17.8 million in August, according to research provider Nielsen Koreanclick, more than one-third of South Korea's 51.8 million population.

REUTERS