Concerns over exclusive deals between delivery services and eateries

SINGAPORE — Exclusive deals struck between food delivery businesses and eateries could pose problems in time to come, the competition watchdog said yesterday, although its investigation showed that such practices have not harmed competition in the market yet.

The Competition Commission of Singapore (CCS) had investigated an alleged anti-competitive practice by an online food delivery business here following complaints.

However, while its probe showed that the unnamed delivery firm had struck exclusive agreements with some restaurants, including fast food outlets and cafes, the CCS said “competition has not been harmed” and the “industry is competitive”.

Mr Toh Han Li, the commission’s chief executive, said exclusive agreements were one method employed by food delivery firms to attain market share. “In the event that the online food delivery provider becomes dominant, the presence of such exclusive agreements risks infringing competition law, as it would affect the competitive state of the market,” he added.

“Instead of relying on exclusive business practices, businesses should compete on merit, leading to a more vibrant market with more choices for restaurants and consumers.”

The online food delivery sector has seen tremendous growth here over the past year, the CCS said, with the likes of Deliveroo, UberEats and Foodpanda allowing consumers to have meals from an array of restaurants delivered to their doorsteps.

The Republic’s competition law does not bar businesses from achieving or striving for market power, but those dominating the market cannot prevent their competitors from competing effectively or shut them out of the market through exclusive practices.

“If such conduct is found to harm competition, CCS can take enforcement action,” the commission said.

Food businesses interviewed by TODAY noted that exclusive deals struck with delivery firms meant eateries pay lower commissions.

Madam Olivia Teo, owner of Old School Delights on Upper Thomson Road, said an exclusive agreement would bring “perhaps lower commissions and more active marketing”.

Nevertheless, the cafe had signed non-exclusive deals with Foodpanda and Deliveroo. Delivery firms have different demographic and area coverage, and strengths that cafes can capitalise on, she added.

At Park Bench Deli, Mr Andrei Soen, its creative director, said the eatery signed an exclusive agreement with Deliveroo earlier this year as it wanted to focus only on one platform.

When contacted, Deliveroo, which launched here last November, said it worked with restaurants which felt that they could benefit further through an exclusive arrangement, but stressed that most deals were non-exclusive. “When the restaurants want to try the other services, we don’t stop them ... However, 99 per cent of them come back to (us) because they see the benefits of the relationship,” said its spokesperson.

Foodpanda’s managing director Emma Heap said: “We welcome competition, as it helps us to all strive to be better at what we do.”

A local start-up, FeastBump, told TODAY that it faces increasingly stiff competition from well-funded major overseas players who can compete with lower delivery fees and minimum order amounts. “For Singapore restaurants to sign exclusive agreements with these major players, this has already made it much harder for a small local start-up like FeastBump to succeed and compete on such an uneven playing field,” it said. Kenneth Cheng