"You Can't Sell Cheaper Than Our App"… Korea Fair Trade Commission Issues Corrective Order and Imposes 470 Million Won Fine on Yogiyo

Yogiyo Prohibits Cheaper Sales via Phone Orders and Other Delivery Apps through 'Lowest Price Guarantee'... Contract Termination for Violations

Fair Trade Commission: Implementation and Enforcement of Lowest Price Guarantee Constitutes Interference in Business Activities

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission (FTC) has decided to issue corrective orders and impose fines on Yogiyo, the second-largest domestic delivery app operator, stating that its 'Lowest Price Guarantee' interferes with business activities. This is the first case where a delivery app was sanctioned for unilaterally implementing a lowest price guarantee on affiliated delivery restaurants, thereby interfering with the restaurants' price-setting decisions, which was deemed unfair business interference.

On the 2nd, the FTC announced that it decided to impose a corrective order and a fine of 468 million KRW on Yogiyo for implementing and enforcing a lowest price guarantee that prohibited delivery restaurants from selling at prices cheaper than those on Yogiyo’s app via direct phone orders or other delivery apps, and for imposing disadvantages such as contract termination if the restaurants violated this policy.

Yogiyo is a delivery app brand operated by Delivery Hero Korea, established in South Korea on November 18, 2011, by Delivery Hero based in Germany, and has been operating since August 2012. Yogiyo is the second-largest delivery app operator by sales (approximately 26%), following Baedal Minjok.

According to the FTC, Yogiyo unilaterally implemented the lowest price guarantee on June 26, 2013, targeting delivery restaurants registered on its app. In this process, it prohibited selling at cheaper prices through other sales channels such as direct phone orders to the restaurant or orders via other delivery apps than on Yogiyo. Yogiyo managed compliance with the lowest price guarantee through its own SI team and other departments. It also requested all employees to report any violations of the lowest price guarantee. Yogiyo employees even posed as regular consumers to inquire about prices at affiliated delivery restaurants.

Yogiyo imposed disadvantages on delivery restaurants that violated the lowest price guarantee. From July 2013 to December 2016, it identified 144 delivery restaurants violating the policy, demanding corrective actions such as price changes, and terminated contracts with 43 restaurants that did not comply.

The FTC judged that Yogiyo’s actions constituted interference in business activities by abusing its trading position to restrict delivery restaurants’ freedom to set prices. Deciding one’s own selling price is a key part of business activities, and the lowest price guarantee excessively restricted the restaurants’ freedom to set prices.

Cho Hong-seon, head of the FTC Seoul Office, stated, "In the rapidly growing domestic delivery app market, it is clear that if delivery apps interfere with the business activities of small-scale delivery restaurants, such as price setting, it may constitute a violation of the law. Taking this opportunity, we plan to strengthen monitoring activities to check whether unfair trade practices using market dominance are occurring not only in delivery apps but also in other online platform sectors."

Regarding the FTC’s sanction decision, Yogiyo stated, "The lowest price guarantee was a consumer protection measure implemented at the launch of the Yogiyo service to prevent consumer disadvantages due to price discrimination and to improve the user experience of the delivery app. We will decide on the subsequent procedures through careful and thorough discussions."

This content was produced with the assistance of AI translation services.