Delivery App Market Faces Tighter Regulations... Support for Small Businesses Drifts Further Away

Consent Decree Rejected Despite 360 Billion Won Win-Win Proposal
Regulatory Pressure Intensifies
Remedies for Damages Remain Elusive; Small Business Organizations Protest

There are concerns that the Fair Trade Commission's (FTC) decision to dismiss the application to initiate the consent decree procedure for delivery applications has made it unlikely that there will be any substantial support for small businesses on these platforms. This is because, with the suspension of social dialogue aimed at alleviating delivery fee burdens, even the mutually beneficial support plan proposed by the platforms is now at risk of being scrapped. As regulatory pressure resumes, there are worries that the industry could contract, potentially pushing small business owners further to the brink.

On June 18, companies such as Woowa Brothers and Coupang submitted a consent decree proposal worth 360 billion won, but the FTC rejected it, prompting backlash from small business organizations that had expected meaningful support. Previously, five major association groups representing platform merchants—Korea Federation of Micro Enterprises, National Federation of Merchants, Korea Foodservice Industry Association, Korea Franchise Association, and Korea Cafe Owners Cooperative—had expressed support for the consent decree proposal to the FTC. In a statement issued on the same day, the groups said, "Unfair practices by delivery platforms should indeed be judged by the law, but neighborhood businesses are currently facing a reality where a domino effect of closures is unfolding week by week," adding, "With this dismissal, various self-help support measures for small business owners are now at risk of evaporating altogether."

According to these small business organizations, if the FTC proceeds with a review to determine whether laws were violated and what sanctions to impose, and if the platforms respond with legal action against penalties such as fines, past cases suggest that it could take at least five years or more to reach a final conclusion. During that time, small business owners may not receive any support for cost reduction or relief, leading to further deterioration of their business conditions. Go Jangsu, director of the Korea Cafe Owners Cooperative, commented, "For small business owners who are already on the edge, what is most urgently needed is not a fine but immediate and substantive support—even a single day sooner." He added, "The mutually beneficial plan contained realistic solutions that would have directly reduced the burden on small businesses. It is regrettable that this decision to reject the proposal does not seem to have fully considered the hardships faced on the ground."

In fact, the latest consent decree proposal by Baemin and others represented the largest support amount ever for mutual benefit. Previously, the largest such proposals had been 100 billion won each: Naver’s 2014 consent decree regarding abuse of search engine dominance and misleading advertising, and Apple Korea’s 2021 proposal related to alleged unfair advertising and repair costs charged to telecom companies. The most recent case, Google's YouTube tying consent decree, included the creation of a 30 billion won fund. Notably, the consent decree proposal for the delivery app sector included immediate cash benefits that merchants could directly experience, which was expected to have a significant practical impact in reducing the business burden for small business owners.

The problem is that, going forward, small business owners may continue to see no tangible benefit, and the situation could stagnate further. The Democratic Party's "Committee for the Protection of the Weak" (Euljiro Committee), which had been leading social dialogue on ways to reduce delivery fees, is currently only confirming clear differences in position among the participating parties. While the five organizations, including the Korea Federation of Micro Enterprises, stated that the FTC's decision has eliminated relief measures, other groups—such as the Association for Fair Platforms and the National Franchisee Association—are calling for severe action against unfair practices by Coupang and Baemin, highlighting the stark contrast in viewpoints.

Industry insiders warn that amid this uncertainty and the repeated collapse of mutually beneficial support plans, efforts to legislate a cap on delivery fees may accelerate. An industry official said, "The inability to find alternatives could become the basis for pushing forward the legislation of a delivery fee cap," adding, "Given the ongoing concerns from academia and experts about negative side effects such as industry contraction, it is necessary to discuss alternatives from a new perspective, such as prioritizing support measures for small-scale businesses."

This content was produced with the assistance of AI translation services.