Foodpanda, Deliveroo to give Hong Kong eateries more flexibility to switch to rivals, option to sell dishes for less independently

[ad_1]

The commission in June warned that Foodpanda and Deliveroo’s contracts could constitute a breach of anti-monopoly regulations, with the companies proposing remedial terms that were later discussed at public consultations.

Competition Commission CEO Rasul Butt has described the changes as a significant step in levelling the industry playing field. Photo: David Wong

Watchdog CEO Rasul Butt on Friday described the changes as a significant step in levelling the industry playing field.

“While restaurants can enjoy more flexibility in partnering with small platforms and pricing menu items across their dine-in and other delivery channels, new entrants and small platforms can partner with more restaurants and grow their network,” he said.

“Ultimately, end customers will reap the benefits of increased competition between platforms, which include more choices, potentially better services and lower menu prices.”

Under the updated deals, eateries under contract will be allowed to offer their dishes at cheaper prices through their own direct delivery and dine-in channels, as well as on smaller rival platforms. The latter arrangement was previously prohibited under Foodpanda’s exclusivity deals.

Deliveroo and Foodpanda offer to amend exclusivity deals with Hong Kong restaurants

According to the watchdog, eateries could lower menu prices based on the commission rates they paid to Foodpanda and Deliveroo under the past arrangements.

The rates ranged from 25 per cent to more than 33 per cent of order values, with only exclusive partners benefitting from lower rates, it said.

The watchdog added that the amended deals with Foodpanda and Deliveroo would ensure restaurants contended with fewer obstacles if they chose to switch to other delivery platforms, including a reduction in notice period from 90 days to no more than two months.

It also said eateries working with Foodpanda could also opt out of the order-to-pickup option stipulated in past contracts.

Restaurants with exclusive partnership agreements could also work with “new entrants” or “small platforms” without losing any sweeteners promised by the industry giants, the commission added.

A KeeTa delivery rider in Mong Kok. The company will not benefit from Foodpanda and Deliveroo’s antitrust commitments made to the Competition Commission due to its market share. Photo: Elson Li

KeeTa, a subsidiary of Chinese delivery giant Meituan, will not benefit from the latter provision since its market share has exceeded the 10 per cent threshold set by the watchdog.

The delivery platform started in May with a limited local launch in Mong Kok, before achieving citywide coverage in October.

The commission on Friday it had calculated KeeTa’s latest market share using “available information” such as offer value data collected from various food delivery platforms. The watchdog stopped short of revealing any figure.

Is there room on the road for a third Hong Kong food delivery service?

Meanwhile, Foodpanda said it was committed to diligently fulfilling the antitrust provisions.

“We look forward to the joint fulfilment of commitments with other industry players, thereby promoting the healthy development of the entire industry,” it said.

Deliveroo said it was cooperating “fully and constructively” with the antitrust watchdog and the updated provisions ensured the company could support restaurants in a “highly competitive and dynamic market”.

The companies must each submit a report to the commission within 120 days and contact the watchdog annually for three years to ensure they comply with the measures.

The industry giants can be released from the obligations if their respective market share falls below 30 per cent.

Either company can also provide market share data to convince the watchdog that a rival operator no longer qualifies as a “small platform”.

Hong Kong food deliverers say Meituan firm’s terms similar to existing operators

According to data analyst Measurable.AI, Deliveroo and Foodpanda respectively accounted for about 40 per cent and 50 per cent of the food delivery sector’s market share in Tsim Sha Tsui, Hung Hom and Sham Shui Po between June 27 and July 27.

KeeTa accounted for 10 per cent of the market in the three locations over the same period.

None of the three companies have made their market share data public.

Institute of Dining Professionals president Ray Chui Man-wai said it would be difficult for restaurateurs to know which platforms met the watchdog’s market share threshold, adding that he felt the limit favoured larger companies.

“It doesn’t seem right as a matter of principle or logic … that a platform will lose such protection once its market share is higher than 10 per cent. It will not be able to grow,” said Chui, who is also the owner of the Kam Kee Cafe restaurant chain, a partner with Foodpanda.

[ad_2]

Source link

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top