Big firms' entry and expansion in designated driver biz restricted for 3 yrs in Korea

[Graphics by Song Ji-yoon]

Designated driver service will stay off-limits to big new players in Korea to protect smaller players, the government concluded but in ambiguity that has irked both big and small companies.

The Korea Commission for Corporate Partnership on Tuesday announced the decision and recommended big firms to avoid new entry into the market and ordered the current market dominants – Kakao Mobility and T Map Mobility under Kakao and SK Group – not to expand their market share for next three years.

The categorization of business started in 2011 to protect the viability of smaller firms from big players. The latest decision made first under the new government led by President Yoon Suk-yeol, however, is sparking complaints from both smaller firms and big companies.

The federation of smaller service providers questions the effectiveness of the decision in the form of recommendation that cannot have binding force.

“We support the restriction on big firms’ new entry into the market but still are skeptical about the effectiveness of the recommendations. There are no specific restrictions on big player’s M&A of hotline service providers or equity investment in their services,” said Jang Yoo-jin, president of the federation.

The market for designated driver services divides into two with the service methods – hotline and platform. The platform market is currently dominated by Kakao Mobility, and its combined share in the hotline and platform markets also is bigger than the others.

Follow-up measures as for restriction on big firms’ cash promotions will be discussed soon after arranging a council with related stakeholders including drivers.

Kakao Mobility in its statement said it respects the decision and will follow the recommendations.

Runner-up T Map Mobility worries the limit to business expansion as its market share is much smaller than the dominant Kakao Mobility due to its late advance into the business. The recommendations could restrict competition in platforms between T Map Mobility and Kakao Mobility.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]