Baemin, Coupang Eats hit with combined W631.9b in fines over price interference

Baemin and Coupang Eats have each been hit with fines exceeding 300 billion won for interfering with restaurant menu prices and minimum order amounts in ways that restricted price competition. Baemin was also found to have effectively forced restaurants onto its own delivery service and to have misrepresented estimated delivery times. A separate allegation that Coupang bundled free Coupang Eats delivery benefits with its Wow membership was sent back for re-examination.

The Korea Fair Trade Commission said Monday it decided on Oct. 29 to impose preliminary fines and corrective orders on Woowa Brothers, the operator of Baemin, and on Coupang Inc., the operator of Coupang Eats — 331.1 billion won and 300.8 billion won ($222 million), respectively.

The violation common to both platforms was a "most-favored-nation" (MFN) clause requiring restaurants listed on their apps to offer trading conditions no less favorable than those on rival delivery apps.

Coupang imposed MFN requirements on six trading conditions — including menu prices, minimum order amounts, discount benefits and customer-facing delivery fees — from July 2023 through January this year. Restaurants that did not comply were excluded from "Wow stores," which receive membership benefits. During some periods, Coupang also operated a system that allowed it to directly modify a restaurant's trading conditions.

Baemin similarly required restaurants to meet MFN conditions on three terms, including menu prices and minimum order amounts, from May 2024 through October last year, excluding non-compliant restaurants from Baemin Club store status.

The Fair Trade Commission found that restaurants excluded from membership benefits saw sharp drops in sales, leading the vast majority of listed businesses to comply. The share of Wow stores meeting MFN conditions rose from about 13 percent in July 2023 to about 94 percent in October last year, while the share of Baemin Club stores climbed from about 63 percent in May 2024 to about 80 percent in January last year.

The commission said the requirements appeared on the surface to offer consumers lower prices, but in practice prevented restaurants from offering cheaper menus on rival apps with lower commission rates, thereby restricting price competition.

Baemin raised its own-delivery brokerage commission rate from 6.8 percent to 9.8 percent in August 2024, while Coupang maintained its rate at 9.8 percent. Commission analysis found that menu prices rose about 0.9 percent on Baemin's own-delivery channel, 0.7 percent on its store-delivery channel and about 1 percent on Coupang Eats in the six weeks surrounding the fee increase. Coupang Eats' average minimum order amount climbed 4.3 percent, from 15,338 won ($11) in April 2024 to 16,003 won in February last year, while Baemin's rose 1.3 percent over the same period. The two platforms together held a combined market share of 92.89 percent by order value last year. The commission concluded that the fee hike combined with both platforms' MFN demands produced a competition-restricting effect similar to collusion, including upward price pressure.

Hwang Won-cheol, a standing commissioner at the Fair Trade Commission, told a briefing Monday that the simultaneous imposition of MFN requirements by the No. 1 and No. 2 players in a market appeared to be the first such case in the world.

Baemin was also sanctioned for effectively forcing restaurants to use its own-delivery service rather than the store-delivery option, which carries a comparatively lower commission burden. The own-delivery model, in which Baemin handles both order brokerage and physical delivery, generates a higher share of revenue for the company than store delivery, which covers only order brokerage.

From August 2023, Baemin reduced or eliminated the app visibility of store-delivery listings and merged the display screens for both delivery types, preventing restaurants from setting different minimum order amounts for each. In April last year, it also discontinued Ultracall, a flat-rate fee plan for store delivery. The commission found that while the series of actions began in August 2023, the element of coercion required for a legal violation was established only from March last year, when the unified store screen was introduced.

The push to expand own delivery was driven by a significant profitability gap. In 2024, Baemin's revenue as a share of transaction value was 7.8 percent for store delivery and 28 percent for own delivery. The number of store-delivery restaurants fell from 256,000 in June 2021 to 91,000 in July last year, while own-delivery restaurants grew from 64,000 to 271,000 over the same period. The commission said the shift increased the commission burden on restaurants and reduced order volumes for independent delivery agencies.

The relevant sales figures used to calculate the fines were 5.01 trillion won for Coupang's MFN requirements and 4.01 trillion won for Baemin's. The figures for Baemin's forced own-delivery conversion and deceptive delivery-time advertising were about 5.75 trillion won and 3.43 trillion won, respectively.

The resulting preliminary fines are 300.8 billion won for Coupang and 331.1 billion won for Baemin. Baemin's fine breaks down into 160.2 billion won for MFN requirements, 155.4 billion won for the forced own-delivery conversion and 15.4 billion won for deceptive advertising. Coupang's fine was increased by 20 percent due to a prior record of legal violations, while Baemin's was reduced by 20 percent in recognition of its cooperation with the investigation.

After launching its probe in July 2024, the commission sought voluntary termination of the MFN requirements, but both companies declined. Baemin subsequently dropped the requirements in October last year and Coupang in January this year, though the commission ordered additional measures including individual notification to listed restaurants.

Baemin was also ordered to halt the forced own-delivery conversion and deceptive advertising, and to reset its store-delivery commission rate — a step the commission said was warranted given that store-delivery and own-delivery rates had converged at 6.8 percent following the discontinuation of Ultracall. Coupang was ordered to revise unfair contract terms that charged restaurants commission on discount amounts borne by the restaurants themselves, with a 60-day deadline to comply.

Meanwhile, the allegation that Coupang tied free Coupang Eats delivery benefits to its Wow membership was referred back for re-examination. The commission's investigator had treated online shopping as the primary product and the delivery app service as the secondary, but Coupang rebuffed that framing, arguing that its delivery and shipping services should each be treated as separate products independent of the membership. The commission determined that the differing product definitions had prevented Coupang from adequately responding to the investigator's argument, and ordered a re-examination accordingly.