Startup Industry "Deep Regret Over Fair Trade Commission's Decision That Threatens the Ecosystem"

Korea Startup Forum and Korea Angel Investment Association Announce Position on Fair Trade Commission's Baemin-DH Merger Review

[Asia Economy Reporter Kim Cheol-hyun] The startup industry has called the corporate merger between Woowa Brothers (Baemin) and Delivery Hero (DH), conditioned on the sale of 'Yogiyo,' an unprecedented measure tantamount to non-approval, criticizing the Fair Trade Commission's decision as ignoring the dynamism of the digital economy and stifling the domestic startup ecosystem. On the 18th, the Korea Startup Forum and the Korea Angel Investment Association released a statement titled 'Position on the Fair Trade Commission's Baemin-DH Merger Review.' The industry stated, "We hope the Fair Trade Commission does not make an irreversible mistake regarding the future of the domestic startup ecosystem and request a reconsideration of the decision."

The reason the industry views the Fair Trade Commission's decision as problematic is that in the digital economy, boundaries between countries and industries are dissolving, and food delivery is one of the most dynamic markets with global alliances and fierce competition. Global consulting firm Frost & Sullivan forecasts the global food delivery market to grow at an average annual rate of 14% to reach $200 billion by 2025. The world's largest retailer Amazon has made significant investments in the food delivery platform Deliveroo, and China's largest online shopping platform Alibaba acquired Ele.me, China's number one food delivery platform. In the U.S., mergers and acquisitions (M&A) among companies are actively occurring, such as Dutch delivery app Takeaway acquiring second-largest Grubhub in June and third-largest Uber Eats acquiring fourth-largest Postmates in July, rapidly reshaping the market faster than any other.

The domestic market is also growing rapidly. According to Statistics Korea, last year, the transaction amount for food delivery services in South Korea approached 10 trillion won. Compared to a year ago when the merger between Woowa Brothers and DH was announced, the domestic delivery market has changed. Strong new entrants have appeared, and open market operators, not delivery app companies, have entered the delivery app market. The possibility of entry from adjacent markets such as open commerce, internet portals, and large retailers into the delivery market has also been demonstrated. The industry stated, "Domestic startups are fiercely competing in a global alliance phase, and this Fair Trade Commission decision does not consider the characteristics of the digital economy where boundaries between countries and industries are collapsing."

The industry also cited the 2009 case when the Fair Trade Commission finally approved eBay's acquisition of Gmarket. The Fair Trade Commission had judged that "the open market is highly dynamic, and the scope of competition restriction damage is localized and can be resolved in the market in the mid to long term." The actual situation of the open market over the past decade has proven the Fair Trade Commission's judgment correct, and the basis for the corporate merger approval applied to the open market can be equally applied to the Baemin-DH merger, the industry emphasized. The industry said, "Considering that the dynamism of the related market has greatly increased compared to 11 years ago, the Fair Trade Commission's judgment is quite regrettable."

The industry also emphasized that without an exit (liquidity event) for startups, the ecosystem itself will wither and argued that domestic startups should not be isolated in the global investment market. Concerns were also raised that the prolonged review of the Baemin-DH merger for over a year is already sending negative signals adding a 'Korea discount' in the global investment market. According to the Korea Venture Capital Association, only 0.7% of cases where domestic venture capital (VC) recovered investment funds this year were through M&A. Compared to the U.S., where 97% of exits are M&A, the exit paths for domestic startups are limited. The merger of Baemin, Korea's representative unicorn, and global company DH is a symbolic case of a global exit through the largest M&A in Korea and an important milestone for the development of the domestic startup ecosystem.

The industry protested, saying, "A free and fair ecosystem must be created so that domestic startups can become key players in the global digital economy," and "The Fair Trade Commission's decision is a measure that drives the isolation and regression of the domestic startup ecosystem." They added, "There are procedural issues as the Fair Trade Commission made an unprecedented decision of a full corporate sale without prior communication with the industry, and if the Fair Trade Commission's review report leads to a final decision, the perspective of global companies toward the domestic innovation ecosystem will inevitably narrow, and the opportunities for successful exits of Korean startups will further decrease."

The Korea Startup Forum, Korea Angel Investment Association, and other industry groups requested, "We ask the Fair Trade Commission to hold forums or public hearings to gather opinions from various stakeholders regarding the Baemin-DH merger review," and added, "We expect a wise decision that comprehensively considers domestic and international market conditions and the development of the startup ecosystem."

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