Hong Kong authority investigates online food delivery platforms

Out-Law News | 10 Feb 2022 | 1:58 am | 1 min. read

The Competition Commission of the Hong Kong Special Administrative Region (SAR) is investigating Foodpanda and Deliveroo, two high profile online food delivery services, to see if they violated the Competition Ordinance by imposing certain requirements on their partner restaurants.

The requirements the Commission is investigating include the services requiring exclusivity from partner restaurants or inducing partner restaurants to agree to exclusivity by including terms in their agreements with partner restaurants, preventing the restaurants from partnering with other online food delivery platforms, according to a statement (2-page / 253KB PDF). It is also investigating whether the delivery services require partner restaurants to offer menu items on their platform at prices that are equal or below the prices offered by partner restaurants’ own menus or other online food delivery platforms, and whether they require partner restaurants which wish to receive online food delivery services to also take up other services from them.

Mohammed Talib of Pinsent Masons said: “The importance of food delivery platforms has also continued to rise for the industry and the public during the pandemic. The Commission’s willingness to investigate these matters is an important demonstration of how it continues to focus on matters that improve competition in the marketplace to benefit the wider community. The use of a questionnaire method to collect input from a wide variety of industry participants is also to be welcomed.”   

“Businesses need to carefully review their contracts and agreements to ensure that they do not have anti-competitive clauses and restrictions in their agreements, in order to ensure that they do not contravene the Competition Ordinance. Clauses that affect prices are often those that need to be considered most carefully,” he said.

Commission chief executive officer Rasul Butt said it was critical to ensure the markets compete effectively. “To safeguard the interests of industry players and consumers as well as other relevant parties is of utmost importance,” he said.

Restaurants which have concerns or information about the practices of the two platforms or the wider online food delivery market are encouraged to complete a dedicated questionnaire on the Commission’s website by 11 February 2022.

The Commission stressed it would not prejudge the outcome of the investigation.