Regulator to solve delivery platform fee issue if special committee doesn't: FTC chief

The government will legally intervene to resolve the issue of exorbitant commission fees levied by delivery platforms if the special committee assigned to the task does not pass a resolution within this month, the Fair Trade Commission Chairman said.

Fair Trade Commission Chairman Han Ki-jeong speaks at a press conference at the Sejong government complex on Sept. 9. [NEWS1]

The government will legally intervene to resolve the issue of exorbitant commission fees levied by delivery platforms if the special committee assigned to the task does not pass a resolution within this month, Fair Trade Commission (FTC) Chairman Han Ki-jeong said on Sunday.

A committee of representatives from food delivery app firms and the restaurant industry was formed in July as part of a government initiative to develop a mutually beneficial plan for industry stakeholders. A sixth meeting will be held on Tuesday, and no significant proposals have been made.

“We agree that high commission fees are not favorable for all parties and are trying our best to come up with a detailed resolution, but no productive conclusion has been made yet,” Han said on KBS radio show “Sunday Diagnosis.”

“If the mutually beneficial plan does not meet societal expectations, the government will seek additional measures to improve the system, such as through legislation,” Han said when asked whether the state would intervene if a satisfactory resolution does not materialize.

“However, it would be best if the stakeholders come up with a reasonable plan,” the FTC chief said. The committee's deadline is until the end of October.

Since forming the committee in July, the government has asked delivery platform companies to submit a plan to address self-employed restaurant owners’ concerns by decreasing fee rates, enhancing commission transparency, improving unfair practices and other measures.

The committee has been unable to compromise as the firms were dead set against reducing commission fees, according to a source quoted by the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily.

A delivery driver passes by Baemin Riders' center in Gangnam District, southern Seoul, on Feb. 21, 2022. Baemin Riders is food delivery app Baedal Minjok's part-time food delivery service. [NEWS1]

Market leader Baedal Minjok, or Baemin, reportedly submitted a plan on Sunday to charge lower fees for businesses with lower revenue.

Baemin’s current commission rate is 9.8 percent on each sale from its listed sellers. The proposed system will levy differentiated rates on shops depending on their revenue, according to local media reports.

For businesses with sales in the upper 40 percent, the same 9.8 percent will be applied, while those in the 40 to 60 percentile will pay 6 percent, and those in the 60 to 80 percentile will pay 5 percent. The lowest rate will be 2 percent.

The plan will likely be pitched at Tuesday’s committee meeting, where shop owners and other platforms will discuss its effectiveness and implementation.

Key issues to be debated are the plan's continuity, as the plan itself is not legally binding and can be reversed; remaining concerns about merchant, delivery and advertising fees that the plan does not address; and potential opposition from shop owners that will continue to have to pay the 9.8 percent rate, as well as from rival apps like Coupang Eats and Yogiyo.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]