The proposed $4 billion merger between Berlin, Germany-based Delivery Hero and South Korea’s Woowa Brothers now faces regulatory hurdles around antitrust concerns, according to The Korea Herald. Some South Korean lawmakers have gone as far as to request the deal get scrapped on the grounds that it is anti-competitive.
In response, South Korea’s antitrust watchdog, the Korea Fair Trade Commission (KFTC), said it would give permission for the deal on the condition that Delivery Hero offload its Yogiyo subsidiary. Yogiyo is South Korea’s second-largest food delivery service, after Woowa’s Baedal Minjok operation. The merger would give Delivery Hero an 87 percent stake in Woowa, and the combined user bases of the two would make up 98.7 percent of the entire restaurant food delivery market in South Korea. Needless to say, concerns abound about what this marketshare would do for competition in the fast-growing South Korean food delivery space.
The situation isn’t unique to Delivery Hero. Antitrust concerns plagued Amazon’s investment in Deliveroo for well over one year. One big reason that deal finally went through was the pandemic’s impact on the restaurant biz, which had a ripple effect on Deliveroo’s business. Similarly, Takeaway.com’s merger with Just Eat faced similar regulatory concerns, though it took far less time for that deal to go through than was the case with Amazon. Regulatory issues were one reason Uber Eats likely killed its ambitions to acquire Grubhub this past summer. The newly formed Just Eat Takeaway.com eventually won the Grubhub bidding war, and there is always a chance that deal could come under regulatory scrutiny before it goes through.
Delivery Hero made clear it will fight the KFTC’s conditions, with Reuters noting the service will “challenge” the recommendation and that Delivery Hero sees it as “a starting point for negotiations.” It will, however, slow the deal down in all likelihood.