Big Deal Between Baemin and Yogiyo on the 23rd Next Month: DH and Fair Trade Commission's Epic Battle

Fair Trade Commission reviews 'DH-Woowa Brothers' merger at plenary session

'Yogiyo Sale Condition' Acceptance by DH is Key
Possibility of Big Data Sharing Restriction between Baemin and Yogiyo
DH May Propose a Counteroffer Instead of Selling Yogiyo

[Asia Economy Reporter Joo Sang-don] On the 23rd of next month, a fierce battle will take place between Delivery Hero (Yogiyo), the first and second largest players in the domestic delivery application market, and Woowa Brothers (Baedal Minjok) regarding the approval of their 4.8 trillion KRW merger and acquisition (M&A). The key point to watch is whether DH will accept the Fair Trade Commission (FTC) Secretariat's condition to 'sell Yogiyo instead of acquiring Baemin.' There is also a possibility that DH may propose alternative structural remedies instead of selling Yogiyo at this meeting.

According to industry sources on the 25th, the FTC will review the corporate merger case of DH and Woowa Brothers at the plenary meeting scheduled for the 23rd of next month. The plenary meeting, equivalent to a first-instance court, is the highest decision-making body of the FTC, consisting of nine commissioners including the chairman, vice-chairman, standing commissioners, and non-standing commissioners.

The core issue of this plenary meeting is whether DH will accept the 'Yogiyo sale condition.' The FTC Secretariat has imposed a structural remedy requiring DH to sell its subsidiary Yogiyo if it wants to acquire Woowa Brothers. DH has stated that it cannot agree to such a condition. However, in a written response to Asia Economy on the 23rd, DH said, "It is not yet certain whether we will follow the Yogiyo sale proposal or request other remedies." Since DH's best scenario is to own both Yogiyo and Baemin, it is highly likely that DH will propose alternative structural remedies equivalent to selling Yogiyo at the plenary meeting. They have not disclosed specific details about the remedies.

Since the Secretariat has made the sale of Yogiyo a condition, it is also possible that behavioral remedies have been imposed accordingly. Even if DH acquires Baemin, restrictions may be placed to prevent sharing of big data between Baemin and Yogiyo. This is to prevent Baemin from utilizing the consumer, restaurant, commercial district, and rider information that Yogiyo has accumulated, which is a core intangible asset of delivery apps. The concern is that if DH uses Yogiyo's big data before selling it, information monopoly issues could arise. Additionally, as part of behavioral remedies, conditions such as a ban on commission fee increases for a certain period may have been attached.

At the plenary meeting, intense debates are also expected over the 'market definition' that determines the scope of the relevant market. The FTC Secretariat views that with the Baemin-Yogiyo merger, DH's market share in the delivery app market would exceed 90%, resulting in a monopoly that ultimately restricts market competition. However, DH argues that it is incorrect to limit the market to delivery apps only, excluding the telephone order market, when calculating market share.

If both sides fail to narrow their positions at the plenary meeting, the final decision on the corporate merger approval may be postponed until early next year. If no conclusion is reached on the day of the plenary meeting, the matter will be reviewed again at the next meeting to make a final decision. The plenary meetings are held weekly on Wednesdays, but the following week falls on December 30th, so the meeting itself may not be held.