South Korea’s Antitrust Regulator Investigates ‘Free Delivery’ Claims by Food Delivery Apps

South Korea’s Fair Trade Commission (KFTC) has initiated an investigation into the “free delivery” marketing strategies employed by popular food delivery platforms, amid increasing concerns over pricing transparency, The Korea Herald reported on Monday.

The KFTC probe seeks to determine whether these “free delivery” offers are truly without cost or if the burden is, in fact, shifted to restaurant owners or customers indirectly. According to The Korea Herald, the investigation will focus on whether delivery platforms’ “free” promotions are actually funded by other transaction parties, raising questions about fair practice within the food delivery sector.

Baedal Minjok, known widely as Baemin and South Korea’s largest food delivery service, is a particular focus of the inquiry. Documents disclosed earlier by Rep. Yoon Hang-hong of the ruling People Power Party indicated that Baemin’s “free delivery” marketing on its mobile app has drawn the KFTC’s attention. If the investigation finds evidence of misleading practices or unfair costs imposed on restaurant partners, Baemin could face antitrust charges, according to The Korea Herald.

“While investigating the industry-wide use of the term ‘free delivery,’ we are also reviewing whether platform operators are pressuring business partners to offer competitive terms, potentially mirroring those of their rivals,” a KFTC official stated, per The Korea Herald. This inquiry into pressure tactics adds to existing concerns about fairness and transparency within the food delivery industry.

Reports suggest that when customers place orders through these delivery apps, platforms often pay up to 5,000 won ($3.60) per order to delivery agencies, with merchants typically covering around 2,900 won of this fee. The revelation that restaurants may shoulder much of the “free delivery” cost has sparked debate about whether these fees are ultimately passed on to consumers as higher prices.

The issue of “free delivery” gained attention during last month’s annual parliamentary inspection when Rep. Yoon pointed out potential misleading claims by Baemin. “Baemin keeps claiming ‘free delivery,’ but it turns out the delivery fee is not free. The merchants bear the cost, which in turn raises consumer prices,” Yoon stated, intensifying the call for greater transparency.

To address these issues, a committee of representatives from food delivery platforms and the restaurant industry was formed in July as part of a government-led initiative aimed at developing balanced practices for all stakeholders. According to The Korea Herald, the committee has met multiple times to discuss these industry challenges, with another meeting scheduled for later Monday. At their most recent gathering, the committee reportedly explored options such as itemizing delivery and service fees on receipts as a possible step toward increased clarity for consumers.