Remaining Variables in Baemin M&A... Potential Market Share Changes and Impact on Venture Industry

[Asia Economy Reporter Moon Chaeseok] The Korea Fair Trade Commission (KFTC) has attached a condition to its approval of Germany's Delivery Hero (DH) acquisition of Baedal Minjok, requiring the sale of its subsidiary Yogiyo, causing the corporate merger to stall. With DH immediately opposing this, attention is focused on the arguments both the KFTC and DH will present at the plenary meeting next month.

DH responded promptly to the KFTC's conditional approval policy, stating, "We do not agree with the KFTC's proposal (policy)" and "We are confident that we can raise objections and persuade the KFTC commissioners at the upcoming plenary meeting."

They added, "The conditional approval policy (by the KFTC) could undermine DH's foundation to enhance Korean users' customer experience through the synergy of the corporate merger," and argued that "it does not benefit the local community, including restaurant owners, riders, and consumers."

With DH's immediate opposition to the KFTC, speculation that the merger could be completed within this year following the KFTC plenary meeting as early as the 9th of next month is losing momentum.

The message from the KFTC is that since the market share would soar to 90.9% with the Baedal Minjok-Yogiyo merger, sincere measures must be taken to prevent disruption of market order.

According to Nielsen Korean Click, as of September (monthly active users), the market shares of delivery application providers are Baedal Minjok 59.7%, Yogiyo 30.0%, and Baedaltong 1.2%. The combined share of the two companies is 90.9%, clearly a monopolistic operator.

From DH's perspective, since new entrants like Coupang Eats and Wemakeprice O are rising, market shares could change anytime even after the merger, so they are likely to argue that the merger itself should not be blocked solely based on the current market share.

It is true that the market share dropped from 98.7% in December last year to 90.9% in September.

Generally, when the KFTC holds a plenary meeting, it tends not to mechanically judge the merits of individual cases but rather considers the overall impact of the merger on the country's entire industry, which is emerging as a variable.

Industry insiders believe that the KFTC will take into account that ▲this merger is a case where domestic companies have been recognized for their value by foreign investors and ▲there is a possibility that it could negatively affect Woowa Brothers, the operator of Baedal Minjok, in its overseas expansion.

The KFTC consistently responds, "We cannot confirm details about individual cases."

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