Hong Kong’s competition authority has launched a probe into suspected anti-competitive conduct from Deliveroo and Foodpanda. The food delivery giants have confirmed they are complying with the investigation.

See also: For local eateries, Foodpanda and Deliveroo are a double-edged sword

In a statement to HKFP on Friday, Deliveroo said that the food delivery business was a “highly competitive market” and that it was being “transparent and responsive” in its communication with the Competition Commission.

A bicycle and Foodpanda delivery bag. File photo: Candice Chau/HKFP.

“We aim to provide our consumers with the best selection of food at great value through an excellent delivery experience. We also aim to support our merchant partners’ growth by enabling them to reach new consumers through online delivery and provide bespoke tools and services to support their businesses,” Deliveroo wrote.

Foodpanda said it would assist with the probe where necessary.

“In respecting the ongoing discussion process, we have no additional comments to share at the moment. However, we will proactively assist and cooperate with the relevant authorities on their information gathering to the best of our ability.”

‘Softening competition’

The Competition Commission announced on Thursday that it was opening an investigation into the city’s two leading delivery companies into whether they had breached the Competition Ordinance, which bans anti-competitive behaviour.

Restaurant staff prepare takeaway orders at an eatery in Tai Wai. Photo: Hillary Leung/HKFP

Deliveroo and Foodpanda were accused of imposing restrictions on restaurant partners, including requiring them to be exclusive to their platform; ordering them to price menu items on the platforms at equal or lower prices than in the eateries; and requiring restaurants to offer pick-up services in addition to delivery.

The two platforms command around 97 per cent of the city’s food delivery market, according to data analytics company Measurable AI.

“The Commission considers that, if present, these requirements may have the potential effect of softening competition among online food delivery platforms, as well as hindering entry and expansion by new or smaller online food delivery platforms, depriving consumers and partner restaurants of the benefits of effective competition,” the Competition Commission’s statement read.

A Foodpanda driver waits for an order outside a Wan Chai restaurant. Photo: Hillary Leung/HKFP

As part of the investigation, restaurants working with Deliveroo and Foodpanda have been invited to complete a questionnaire that asks whether their partnership with the platforms was on an exclusive basis and if other channels – like dine-in and customer pick-up – were good replacements for online delivery services.

The commission also contacted restaurant industry associations to pass the questionnaire on to members.

Rapid growth of industry

Foodpanda brought its food delivery services to Hong Kong in 2014, with Deliveroo arriving about a year later. Since then, they have offered restaurants an extra revenue stream – albeit at a price. Eateries have told HKFP that the two giants charge around 30 to 35 per cent in commissions per delivery order, and are enticed to go “exclusive” with the apps for lower rates.

A Deliveroo driver in Central. Photo: Hillary Leung/HKFP

Another platform, UberEats, launched in the city in 2016. It exited Hong Kong last month.

Since Covid-19 began, restaurants have been increasingly reliant on food delivery platforms to bring in business during dismal economic times.

“The online food delivery industry has grown tremendously in Hong Kong in recent years and the food delivery platforms are playing a crucial role in the daily lives of Hong Kong people,” Rasul Butt, Chief Executive Officer of the Competition Commission, said.

“Ensuring effective competition in the market to safeguard the interests of industry players and consumers as well as other relevant parties is therefore of utmost importance.”

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Hillary Leung

Hillary has an interest in social issues and politics. Previously, she reported on Asia broadly - including on Hong Kong's 2019 protests - for TIME Magazine and covered local news at Coconuts Hong Kong.