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FTC to scrutinize Uber Eats' market share in foodpanda takeover review

05/24/2024 12:17 AM
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CNA file photo
CNA file photo

Taipei, May 23 (CNA) Taiwan's Fair Trade Commission (FTC) is set to closely examine the impact of food delivery platform Uber Eats' planned acquisition of foodpanda on market competition, with a particular focus on changes in market share, the commission's chair said Thursday.

The FTC will primarily assess potential market share by analyzing the revenue, credit card receipts, and number of deals of both domestic delivery platform giants, FTC chair Lee May (李鎂) explained during her interpellation after the agreement was announced.

On May 14, Delivery Hero, the owner of foodpanda, said in a statement that it had reached an agreement with Uber Eats to sell its business in Taiwan to the latter for US$950 million, with the deal subject to regulatory approval.

"We will measure, with its major rival gone, the potential impact on [Uber Eats'] ability to [arbitrarily] raise prices, to work with other business operators [to pose a threat to market fairness]... and to prevent other potential competitors from joining the market," Lee said.

However, the result will not wholly hinge on whether the FTC regards Uber Eats as a monopolistic enterprise in the event of a successful merger, according to the commission, given that a monopoly can benefit the market under certain circumstances.

The commission, which "holds a neutral attitude toward monopolistic structures," will try to prevent a monopolistic enterprise from capitalizing on its market status rather than from coming into existence, the FTC officials said.

Lee May, chairwoman of the Fair Trade Commission, reports during Thursday's interpellation in Taipei. CNA photo May 23, 2024
Lee May, chairwoman of the Fair Trade Commission, reports during Thursday's interpellation in Taipei. CNA photo May 23, 2024

The commission will take into consideration the rights of those affected by the deal, such as restaurant operators and food delivery drivers, while public hearings will also be held to collect diverse opinions.

"We will then assess whether the overall economic pros brought by the merger outweigh the cons that come with limiting market competition before we make a final decision," Lee added.

According to Lee, the FTC, the competent authority in charge of the Fair Trade Act, received Uber Eats' acquisition request on May 14 and is checking whether all necessary documents have been submitted before starting to review the merger.

Citing the Fair Trade Act, Lee said the FTC will review the case within 30 to no more than 90 weekdays once the review starts, during which the acquisition cannot take place.

If the deal is passed, Uber Eats could have a market share in excess of 80 percent in Taiwan, according to data compiled by the FTC in 2020, which the commission recently pledged to reexamine.

National Delivery Industrial Union advisor Su Po-hao speaks to the press in Taipei on May 14. CNA file photo
National Delivery Industrial Union advisor Su Po-hao speaks to the press in Taipei on May 14. CNA file photo

The deal, referred to as "one of the largest-ever international acquisitions in Taiwan" in Delivery Hero's statement, involves the livelihood of 140,000 food delivery couriers hired by foodpanda.

The National Delivery Industrial Union hopes that Uber Eats will also take over all of the delivery drivers currently hired by foodpanda should the merger be approved, but no promises have been made, union advisor Su Po-hao (蘇柏豪) told the press on May 14.

Even if that wish is fulfilled, the deal may still leave local delivery drivers at the mercy of their new employer, as both foodpanda and Uber Eats have cut wages over the past few years, Su said.

Foodpanda and Uber Eats are far ahead of other competitors in terms of popularity in Taiwan. A survey released in February by the Market Intelligence & Consulting Institute found that customers preferring foodpanda and Uber Eats accounted for 73.6 percent and 57.6 percent, respectively, with no other competitors reaching 10 percent.

(By Pan Tzu-yu and Chao Yen-hsiang)

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