‘Free delivery’ promotions under antitrust scrutiny

South Korea’s antitrust regulator has opened an investigation into “free delivery” promotions widely used by food ordering and delivery platforms here, according to industry sources on Monday.

The Fair Trade Commission will look into whether delivery services have been offered actually free of charge without the costs being shouldered by restaurant owners or consumers.

Earlier in the day, Rep. Yoon Hang-hong of the ruling People Power Party revealed documents that Baedal Minjok, the nation’s largest food delivery service, is currently under antitrust scrutiny for its use of “free delivery” on its mobile app.

Depending on the investigation, the platform operator could face antitrust charges for unfair business practices with restaurant owners or misleading consumers with false claims.

“While investigating the use of the ‘free delivery’ term across the overall industry, we are also looking into whether the platform operators are putting pressure on business partners to offer the most favorable deal conditions on par with its rivals,” an FTC official said, citing another long-held unfair practice within the industry.

Sources said when consumers order food through delivery apps, platforms pay up to 5,000 won ($3.60) per order to the delivery agency, with more than 2,900 won typically covered by the merchant.

At the annual parliamentary inspection last month, Rep. Yoon also said, "Baemin keeps claiming ‘free delivery,’ but it turns out the delivery fee is not free. The merchants bear the cost, which in turn raises consumer prices."

A committee of representatives from food delivery app firms and the restaurant industry was formed in July as part of a government initiative to develop a mutually beneficial plan for industry stakeholders.

A 10th meeting is scheduled for later Monday and the free delivery issue is expected to continue being discussed at the gathering.

At the committee meeting last week, they reportedly discussed marking delivery fees and service charges on receipts as a potential solution.