Taiwan's FTC blocks Uber Eats-Foodpanda merger

Taipei, Dec. 25 (CNA) Taiwan's Fair Trade Commission (FTC) on Wednesday voted to block delivery platform Uber Eats' proposed acquisition of rival service Foodpanda in the country on the grounds that it would restrict competition.

Uber Technologies Inc. announced on May 14 that it had reached an agreement to acquire Delivery Hero SE's Foodpanda delivery service in Taiwan for US$950 million.

The planned merger -- which would have given Uber Eats a market share of over 90 percent in Taiwan -- drew significant scrutiny, but was only taken up for review after the FTC received application documents from Uber in November.

At a press conference Wednesday, the FTC announced that it had voted to reject the merger, saying that it posed a clear risk of restricting competition, given that Foodpanda is Uber Eats' chief competitor.

The proposed merger would leave Uber Eats "unfettered by competition," and therefore more likely to raise prices on consumers and restaurants, the commission said.

The regulator also highlighted the fact that Uber Eats' business comes primarily from individual consumers and small to medium-sized restaurants.

If the merger proceeded, it said, these parties would have few options for "going around" the platform, meaning that there would be no "counterweight" to the company's power in the food delivery market.

Although the merger would bring some benefits -- including increased efficiency and the "economics of density" -- these would be significantly outweighed by the deal's negative effects, the commission said.

While Uber Eats offered commitments to address its concerns, these were only "temporary corrective measures," and would be unlikely to restore or maintain the level of competition that currently exists, the FTC said.

In response, Taiwan's National Delivery Industrial Union praised the ruling as a "correct decision" that "saved the delivery industry from falling into the hands of a single company."

Food delivery platforms have operated in Taiwan for more than 10 years now, but are still not governed by a specific set of laws or designated regulatory agency, union spokesman Su Po-hao (蘇柏豪) said in a statement.

During that period, the platforms' pay and protections for drivers have steadily worsened, while prices for both consumers and restaurants have gone up, Su said.

To build on the FTC's decision, however, the Executive Yuan and lawmakers should work to pass a "delivery industry special act" in the next legislative session, to lift the delivery industry from its current state of "lawlessness," Su said.