Monopoly's tyranny

Food delivery app ought to withdraw unilateral fee increase

At a time when many restaurants are reeling under the COVID-19 shock, the nation's largest food delivery app is adding insult to injury by raising fees under the pretext of revising its fee structure. Starting this month, Baemin changed its charging system to impose 5.8 percent commission per delivery, from the previous flat monthly rate of 88,000 won ($72). Restaurant owners vehemently criticized it as fee increase using a “cheap trick.”

The Korea Federation of Micro Enterprise said only tiny shops earning below 1.55 million won a month would benefit from the revised payment system while most others would face enormous cost increase. Baemin is apparently using the ongoing social-distancing drive and consequent rise in delivery demand just to fatten its own pockets. The Fair Trade Commission needs to investigate thoroughly whether the new payment scheme might be a violation of the antitrust act with the company abusing its monopoly status, and strictly apply relevant laws to any unfair practice.

Baemin is defending itself, saying the new system was aimed to eliminate the domination of orders by large restaurants while protecting ones run by the self-employed. There is no room for excuse, however, if the number of losers far exceeds that of winners, and expected losses seems to outweigh benefits. For instance, a fried chicken restaurant with a monthly turnover of 30 million won reportedly will have to pay 1.7 million won a month under the new system, nearly six times the previous 300,000 won. Woowa Brothers, Baemin's operator, is rubbing salt into the wound of self-employed restaurateurs, forcing some municipal and provincial authorities to come up with their own delivery apps.

Amid the mounting outcries about Baemin's high-handedness, the controversial merger between the nation's top-three delivery apps through Germany's Delivery Hero has landed on the chopping block, too. If the antitrust agency gives the nod to the planned merger, the newly emerging company will dominate more than 90 percent of the domestic market. Most businesses, particularly small ones, are bearing the brunt of the new coronavirus' economic impact. No more reasons are necessary for Baemin to withdraw its payment system change, i.e., commission increase. Otherwise, consumers may punish it with a boycott.