Civic groups and small business associations have accused Woowa Brothers of engaging in unfair practices. (Image courtesy of Yonhap)
SEOUL, Jul. 24 (Korea Bizwire) – Baemin, the dominant player in South Korea’s food delivery market with over 60% market share, is facing intense scrutiny following its decision to increase service fees.
Civic groups and small business associations have accused the company, also known as Woowa Brothers, of engaging in unfair practices. The government’s newly formed delivery platform cooperation council is expected to pressure Baemin and other delivery companies to propose measures that will alleviate the burden on small business owners.
On July 23, the People’s Solidarity for Participatory Democracy (PSPD), a prominent civic group, held a press conference announcing its intention to report Baemin’s alleged unfair practices to the Fair Trade Commission.
The PSPD claims that Baemin has abused its market-dominant position, engaged in discriminatory treatment, interfered with business operations, imposed unfair fees, and forced the implementation of a lowest price guarantee system.
These actions, the group argues, have led to increased fees for small merchants and higher dining costs for consumers.
On July 23, the People’s Solidarity for Participatory Democracy (PSPD), a prominent civic group, held a press conference announcing its intention to report Baemin’s alleged unfair practices to the Fair Trade Commission. (Image courtesy of Yonhap)
Baemin announced on July 10 that it would raise the commission fee for its “Baemin1Plus” service from 6.8% to 9.8% (excluding VAT) starting August 9. This service operates on a percentage-based fee structure, where Baemin’s earnings increase proportionally with restaurant sales.
The Fair Trade Commission began investigating potential unfair practices by delivery platforms, including Baemin, last week. However, this investigation is reportedly not directly related to the recent fee increase.
The government, which had announced plans to subsidize delivery fees for small businesses in its second-half economic policy direction on July 3, was caught off guard by Baemin’s fee hike announcement just a week later.
Four government ministries, including the Ministry of Economy and Finance and the Fair Trade Commission, plan to launch a cooperation council with delivery platforms and affiliated businesses to discuss issues such as fees and ways to promote mutual growth.
However, a Baemin representative stated that the fee increase is separate from the launch of the cooperation council or the Fair Trade Commission’s investigation.
The company maintains that the fee hike was “an unavoidable choice” given the competitive landscape, noting that the company’s fees are still 3 percentage points lower than those of their main competitor, Coupang Eats.
Ashley Song (ashley@koreabizwire.com)
