South Korea Rejects Delivery App Settlement Offers, Citing Insufficient Competition Measures

South Korea's Fair Trade Commission (KFTC) has rejected settlement proposals from major food delivery platforms Baedal Minjok (Baemin) and Coupang Eats, deeming them insufficient to restore fair competition. The decision, made during recent KFTC plenary sessions, means the companies' "consent decree" applications, which allow for the resolution of alleged violations without a formal judgment, have been denied.

Both companies had presented substantial "win-win" plans. Baemin's operator, Woowa Brothers, proposed a 300 billion won (approximately $270 million) support package over three years. Coupang Eats' operator, Coupang, offered 60 billion won (approximately $54 million) over four years. Notably, Coupang's offer exceeded the estimated fine for its alleged "most-favored-nation" (MFN) demand, which was projected between 25 billion and 42 billion won.

The KFTC cited insufficient restoration of competitive order as the primary reason for rejection. While the proposed amounts were significant, the commission suggested that the measures did not adequately address the competitive harm caused by the platforms' practices. Concerns were also raised that some proposed support measures might overlap with existing promotions or lacked specific details, making them difficult to assess as genuine remedies for past violations.

This rejection creates uncertainty for businesses seeking to resolve disputes through the consent decree system. The KFTC stated that the evaluation criteria extend beyond the monetary value of the proposed settlements. However, the lack of clear, publicly disclosed guidelines on what constitutes an acceptable settlement makes it difficult for companies to predict the likelihood of future applications being approved. The KFTC will now proceed with a formal investigation into the alleged violations by both platforms.

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The KFTC will now proceed with a formal investigation into the alleged violations by both platforms.