'Restaurant Minimum Price Coercion' Allegation Against Yogiyo Operator, Not Guilty in First Trial

A delivery motorcycle is parked in front of a Yogiyo store in downtown Seoul. Photo by Hyunmin Kim kimhyun81@

"Criminal punishment for the launch of new technology services requires more careful judgment on whether the intent (of the offense) is recognized."

The delivery app operator Yogiyo's parent company, Wehyeondae Sang-sang (formerly Delivery Hero Korea), which was prosecuted for allegedly forcing franchise delivery restaurants to set 'lowest price for app orders,' was acquitted in the first trial.

On the afternoon of the 15th, Judge Joo Jin-am of the Seoul Central District Court Criminal Division 15 ruled not guilty to Wehyeondae Sang-sang, which was charged with violating the Fair Trade Act (abuse of superior bargaining position), stating, "It cannot be definitively concluded that the company's executives clearly recognized that implementing the lowest price guarantee system and applying the non-discrimination clause constituted unfair trade practices."

Judge Joo explained, "(In the early service phase) restaurants with sales below a certain amount bore less advertising costs through the commission fee system introduced by Yogiyo compared to the monthly flat-rate system of other apps. However, as sales increased, some restaurants found the commission system disadvantageous, and there were cases where sales prices through Yogiyo were set higher than other apps."

He added, "Subsequently, consumers came to perceive 'Yogiyo's sales prices are higher,' leading the defendant company to implement the lowest price guarantee system," and "the Fair Trade Commission in 2016 guided the abolition of the lowest price guarantee system, and the defendant company promptly abolished it."

Judge Joo pointed out, "The scope of management interference acts and transaction details under the Enforcement Decree of the Fair Trade Act is unclear," and "If criminal punishment is possible upon violation, it was necessary for the Fair Trade Commission to prepare and announce guidelines or enactments to clearly understand the meaning and legal principles."

He emphasized, "If punishment is imposed without considering this, it could restrict technological innovation and the market launch of new products," and "This could result in outcomes contrary to the purpose of the Fair Trade Act, which aims to prevent excessive economic concentration, foster fair, free, and creative business activities, protect consumers, and promote national economic development."

Earlier, in June 2020, the Fair Trade Commission imposed corrective orders and a fine of about 460 million KRW on Wehyeondae Sang-sang. This was because from July 2013 to December 2016, Wehyeondae Sang-sang identified 144 restaurants that did not comply with the lowest price guarantee system through self-monitoring and consumer reports, demanding price reductions or increases on other delivery apps, or changes in delivery fees, and terminated contracts with 43 restaurants that did not comply. The prosecution indicted Wehyeondae Sang-sang for unfair management interference and brought the case to criminal trial.

In court, Wehyeondae Sang-sang claimed innocence, arguing it was a 'non-discrimination system,' not a 'lowest price guarantee system.' The defense stated, "We did not interfere with which app to adjust prices with, Yogiyo or others," and "We protected consumer trust that delivery food prices would not differ and lowered food prices for consumers."

They further argued that given the rapid growth of the delivery app market in recent years, restaurants' dependence on Yogiyo at the time the lowest price guarantee system was implemented was not high enough to constitute abuse of bargaining position. They also claimed that without the lowest price guarantee system, Yogiyo's service would have struggled to survive in its early stages. Ultimately, they argued that the system promoted competition among delivery apps and revitalized the delivery food market, positively impacting consumers and restaurants.

On the other hand, the prosecution requested a fine of 50 million KRW. They pointed out that as the second-largest player in the rapidly growing delivery app market with over 25% market share, restaurants highly dependent on transactions would have found it difficult to refuse related demands.

The prosecution argued, "(The legislative intent of the Fair Trade Act provision) is to prohibit business owners in a relatively superior position from abusing that position to impose disadvantages on the other party in transactions," and "Price determination is the most important and core decision in restaurant management. Restaurants have the freedom to decide food prices and service items considering cost differences by sales channels on the day." They also stated, "At that time, Yogiyo separately charged commissions unlike competitors, which necessitated restaurants to set higher prices."

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