Baemin defends its business strategies amid FTC investigation

Baemin, South Korea’s largest food delivery app, has come under scrutiny from the Fair Trade Commission over allegations of unfair business practices, sparking a broader debate about rising fees and competition in the delivery industry. /Yonhap News

South Korea’s delivery giant ‘Baedal Minjok (hereafter Baemin)’ has responded to the Fair Trade Commission’s accusations regarding the most favored nation (MFN) treatment, stating that it was merely a defensive measure against competitors.

Baemin claims that Coupang Eats, a rival service, first pressured merchants to match their food prices and discounts to the same level as those offered by Coupang Eats, leaving Baemin no choice but to respond.

Recently, Baemin has been accused of forcing its partnered restaurants to match their food prices and discount benefits with those of other delivery apps. The Fair Trade Commission views this practice as a core issue, which has stifled competition among delivery platforms and driven up commission fees.

On Sept. 29, Baemin explained that their competitor had required merchants to match menu prices and delivery fees to the same levels as other platforms. In addition, they had offered 10% discounts for membership orders and demanded that merchants provide coupons and other discounts at the same level as their competitors.

Baemin further stated that the competitor introduced free delivery for membership users starting in late March of this year, while continuing to insist that merchants offer the same benefits, such as discounts and delivery fees, across all platforms without giving any one service an advantage.

Baemin added that despite these circumstances, no regulatory action had been taken, which left them with no choice but to introduce their own free delivery service for Baemin Club members starting in May as a defensive measure. They explained that in a competitive landscape, if one side’s practice of requiring equal treatment across platforms was tolerated, the other side would be at a disadvantage if they did not respond.

Previously, on Sept. 27, the Korea Franchise Association held a meeting where they announced plans to file a complaint with the Fair Trade Commission. They accused Baemin of various unfair practices, including two rounds of delivery fee hikes under its monopolistic position. The association highlighted several key issues, including price abuse, preferential treatment toward its own services, and demands for equal treatment across platforms.

The association is urging the government to take more active measures to address the rising commission fees on delivery platforms.

Association President Jung Hyeon-sik explained that the high fees charged by delivery apps are placing a heavy financial burden on businesses, with some even being forced to close. He added that Coupang Eats is no better than Baemin and that they are collecting evidence on similar practices, including demands for equal treatment across platforms.