The Competition & Consumer Commission Singapore (CCCS) will be investigating the online food delivery and virtual kitchen sectors. This comes after shared kitchen operator Smart City Kitchens filed a complaint against Deliveroo and GrabFood in July 2019, claiming these companies "go against the spirit of fair play and healthy competition”. It appealed to CCCS to “help level the playing field”.
Smart City Kitchens, which opened in June this year rent out its facility to food businesses. In a statement to Marketing, the competition watchdog said it will be looking at the terms of exclusive agreements which allegedly prevent F&B tenants of virtual kitchens from using the online food delivery services of competitors such as Grab and Deliveroo. The terms also allegedly indicate the refusal to supply online food delivery service to F&B tenants of virtual kitchens run/owned by competitors.
According to CCCS, third party feedback indicated that it is important for F&B businesses to have access to multiple online food delivery services in order to reach a wider consumer base. The competition watchdog is also inviting industry players and other interested parties with concerns or relevant information to assist CCCS in the investigation.
Virtual kitchens, or cloud kitchens, are commercial kitchen spaces rented out to F&B businesses for food preparation predominantly for consumers ordering food through online food delivery services. F&B tenants of a virtual kitchen are usually housed within a common building with shared facilities.
Currently, GrabFood has its own shared kitchens in Indonesia, Thailand and Vietnam and aims to expand this concept to other countries in the region, including Singapore. Earlier in July, Deliveroo told Marketing that the company is in discussions with Smart City Kitchens and is evaluating what is in the “best interests” for its restaurant partners and customers. Meanwhile, foodpanda is a partner of Smart City Kitchens, and and owns two shared kitchens. Grab has declined to comment on this matter, and Marketing has reached out to Smart City Kitchens for comment.
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