South Korea Orders Delivery Hero to Sell Local Unit for Takeover

South Korea’s antitrust watchdog orderedDelivery Hero SE to sell its local unit before proceeding with its planned acquisition of the country’s largest food delivery platform.

The Korea Fair Trade Commission approved Delivery Hero’s takeover ofWoowa Brothers Corp. under the condition that it divests Delivery Hero Korea, which operates the nation’s second largest food delivery app under the Yogiyo brand, the regulator said in a statement on Monday.

The decision is in line with an initial report made by a review team at the FTC inNovember. FTC held its final hearing last week to make Monday’s order.

The merger of Yogiyo and Woowa’s “Baedal Minjok” brand, which together control a combined market share of 99.2%, could lead to higher fees for restaurants and also hurt customers, the FTC said. It could also prevent other competitors from entering the market because of its strong market power and information assets, it said.

The decision came after some South Korean lawmakers expressed concerns over the takeover as the coronavirus outbreak put pressure on small restaurants and mom-and-pop stores.

Delivery Hero announced plans to take majority control of the Korean food-delivery app inDecember last year at a $4 billion valuation, expanding the German company’s presence in the fast-growing Asian market. The investment would also help Woowa go up against SoftBank Group Corp.-funded competitor Coupang, which has been investing aggressively in food delivery.

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