The Panel on Competition announced today (6 June) that as the exclusive cooperation or price restrictions proposed by Foodpanda and Deliveroo are two major online food delivery platforms, they may harm market competition, making it difficult for new and small food delivery platforms to join the competition.
In this regard, pursuant to section 1 of the Ordinance, the Commission discussed with the two platforms the details of the amendments and deletions of the relevant provisions and obtained their commitments to address their concerns. The Commission will commence a consultation with the public from now on before deciding whether to accept their commitment.


The two platforms constitute a network effect, and it is difficult for latecomers to join the competition

According to a spokesman for the Commission, the two major online food delivery platforms, Foodpanda and Deliveroo, have a market share of more than 90%, other platforms such as Uber Eats, which is more well-known but has withdrawn from Hong Kong, had a market share of less than 10% at its peak, while the rest of HKTVMall and Honestbee also chose to withdraw from the market, failing to compete with the two platforms.

A spokesman for the Commission believes that the more restaurants on takeaway platforms, the more customers they can attract, which indirectly constitutes a network effect and makes it more difficult for other online platforms to join the market later.

Exclusive cooperation and price restrictions may harm competition

The Commission's investigation found that the agreement between Foodpanda and Deliveroo and the partner restaurant included the following provisions:

1) If the partner restaurant is willing to cooperate exclusively, Foodpanda or Household Delivery can charge a lower commission rate, involving exclusive terms and conditions;

2) Restricting partner restaurants from exclusive cooperation only, if they switch to cooperating with other platforms at the same time, it may punish the restaurant, which involves violating the exclusive cooperation clause;

3) Preventing cooperative restaurants from offering lower prices to consumers through their own sales channels or other online takeaway platforms, involving price restrictions;

4) Foodpanda also requires restaurants to use its platform's takeaway pick-up service when using takeaway delivery services, which involves tie-in sales provisions, and in fact, restaurants are difficult to cancel.


The clarification is not intervening in the market or targeting large companies

A spokesman for the Commission emphasised that the two platforms were not engaged in price-fixing and pointed out that exclusive cooperation was not unlawful, nor was it interfering in the market or targeting large companies, stressing that the Commission only considered whether the relevant circumstances harmed competition in accordance with the Ordinance, "understanding that exclusivity is a commercial practice that will promote competition under certain circumstances."

However, in view of the market environment for online food delivery platforms in Hong Kong, the Commission is of the view that the relevant provisions may hinder the establishment of new or small platforms from entering the market and expanding their businesses, so that restaurants and consumers will not be able to enjoy the benefits of effective competition, or may have an anti-competitive effect.

It is recommended that the two platforms commit to amending or deleting the proposed anti-competitive provisions

In this regard, the Commission considered that certain requirements imposed on restaurants by the two platforms might contravene the First Conduct Rule of the Ordinance and harm market competition, and discussed with the two platforms the details of amending and deleting the relevant provisions. The two platforms are also willing to make commitments under section 60 of the Ordinance to address the Commission's concerns, including:

1) Amend the exclusivity clause so that even if the restaurant cooperates with other new and smaller platforms (which has not had a market share of more than 10% in Hong Kong in the past), it will not lose the commercial incentives enjoyed by the exclusive partnership, such as lower commission rates;

2) Amend the exclusion clause to make it easier for exclusive restaurants to work with other platforms at the same time;

3) Remove price restrictions, allowing restaurants to offer lower prices on their own sales channels and other online takeaway platforms;

4) (Foodpanda only) Removes the tie-in clause and gives restaurants the freedom to choose whether or not to use Foodpanda's takeaway service.


Commission (profile photo)

A reporting and monitoring mechanism is proposed to ensure that the two platforms comply with their commitments

Foodpanda and Deliveroo have offered to notify their partner restaurants of amendments to existing agreements within 90 days of the commitment taking effect. The commitment will be valid for a period of three years from the effective date and there will be a regular reporting and monitoring mechanism to ensure compliance with the commitment. The spokesperson for the Commission is of the view that the commitments appropriately address the Commission's concerns and therefore intends to accept them.

Comments are invited to be submitted by 6.15 at the latest

In addition to the respective commitments of Foodpanda and Deliveroo, the Commission has also issued an Consultation Notice and FAQs to provide more information on the matter, and the relevant documents have been uploaded to the Commission's website.

The Commission invites comments on the proposed commitments to be submitted by 6pm on 15 June this year at the latest, after which a decision on whether to accept the commitments will be made. All comments shall be submitted to the Commission as follows:

1. (Suggested method) Email to Consultation@compcomm.hk and please indicate case number EC/03JJ in the subject of the email;

2. Fax to +852 2522 4997; or

3. Mail:
Submission by the Panel of
Competition at South Island Place
, 8/F, 19 Wong Chuk Hang Road, Wong Chuk Hang
, Hong Kong (Case No. EC/
03JJ)


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