foodpanda Hong Kong and Deliveroo Hong Kong have pledged to make amendments to their existing agreements with their partnering restaurants after the local competition watchdog revealed that their existing policies may harm competitions in the market and even break the law.
According to the commission's investigation, the existing agreements of the two delivery platforms allow foodpanda HK or Deliveroo HK charging restaurants a lower commission rate if they work exclusively with the respective platform, restricting and penalising restaurants for switching from exclusive partnerships to working with other platforms.
The agreements also prevent restaurants from offering lower menu prices to consumers on their own direct channels and/or on competing online platforms. Moreover, the investigation found that foodpanda HK requires restaurants which use its food delivery services to also use its order-to-pickup services, whereby consumers can place an order on its platform and pick it up at the restaurant themselves.
Given that the two delivery platforms have been dominating the local food delivery market to certain extent, the Competition Commission considers that their existing policies with partnering restaurants may hinder entry and expansion by new or smaller platforms, eventually softening competition in the market. This would also deprive restaurants and consumers of the benefits of effective competition, said the watchdog.
To address the watchdog’s concerns, foodpanda HK and Deliveroo HK have each offered to amend the exclusive terms so that restaurants can partner with new and smaller platforms without losing the commercial incentives entitled to only working with the two platforms. Furthermore, they have offered to amend the Breach of Exclusivity Provisions, making it easier for restaurants to switch away from working exclusively with either foodpanda HK or Deliveroo HK and partner with other online food delivery platforms and would allow restaurants to charge lower menu prices on their own channels and other food delivery platforms.
Additionally, foodpanda HK has offered to allow restaurants the freedom of whether or not to use its order-to-pickup services.
The commission said the two platforms have promised to make the amendments in 90 days as they enter into force. The amendments proposed by the two platforms would last three years from their effective date, with reporting and monitoring mechanisms in place to ensure compliance.
In response, foodpanda HK told MARKETING-INTERACTIVE that as the legal process was still taking place, it had no additional comments to share at the moment. “We have and will continue to cooperate with the Hong Kong Competition Commission to the best of our ability,’ it said.
Meanwhile, a spokesperson from Deliveroo HK said: “Deliveroo has been co-operating fully and constructively with the Hong Kong Competition Commission. The HKCC has proposed voluntary commitments which are being consulted on. We will wait for that public consultation to end before we re-engage with the Commission. No final decisions have been made."
The spokesperson added that Hong Kong is a highly competitive and dynamic market and Deliveroo HK is committed to supporting all sides of the marketplace including its partner restaurants, riders and consumers. “We aim to provide our consumers with the best selection of food at great value through an excellent delivery experience. We also aim to support our partners’ growth by enabling them to reach new consumers through online delivery and provide bespoke tools and services to support their businesses," the spokesperson added.
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