Debate Over Delivery Fee Regulation Continues... "Impact Assessment Must Come First to Ensure No One Is Harmed"

Questions over effectiveness, concerns about the balloon effect
A regulatory impact assessment should come first to prevent harm to those in the industry

Amid differing views between self-employed business owners and delivery riders over legislation to cap delivery platform fees, critics said a regulatory impact assessment should come first to ensure that no one in the ecosystem is harmed, rather than rushing to introduce regulations. They said a balanced approach is needed, as pushing ahead with regulations that reflect only one side’s views could lead to unintended consequences.

These views were voiced at a discussion on legislation to protect self-employed business owners from delivery platforms, held at the National Assembly on the 6th. The discussion was held to consider the policy effects of bills and ways to design a reasonable regulatory framework concerning delivery app regulations recently being debated in the National Assembly. It was hosted by Kim Min-jeon, a People Power Party lawmaker.

A forum titled "Legislation on Delivery Platforms to Protect Self-Employed Business Owners" is being held at the National Assembly on the 6th.

Lee Seung-min, a professor at Sungkyunkwan University School of Law, who delivered the first presentation, stressed that there is no need for strict regulation because barriers to entry in the delivery app market are very low. The entry of public delivery apps such as Ttaenggyeoyo, their rapid growth, and the rise of later entrants that shift the rankings all demonstrate the low barriers to entry, he said, adding that this kind of market competition allows alternatives that can ease the burden of delivery fees. Professor Lee also pointed out that a cap on total fees, including delivery fees as well as brokerage fees, would be structurally impossible to implement. "Directly setting fees would come close to being unconstitutional, and unnecessary price controls distort the market and cause social losses," he said.

In the second presentation, Hong Hyun-woo, a professor of economics at Chungnam National University, said that fee reductions may not ultimately translate into greater social welfare. He added that if losses from a decline in orders exceed the benefits of lower fees, restaurant earnings could also fall, making a comprehensive review necessary. He cited the case of the United States, where a 15% cap was implemented: although restaurants' profits increased, total welfare for consumers, platforms and others fell by 8%. "Policy design should comprehensively consider the effects and limitations of fee caps, as well as the social welfare of the market as a whole and the fairness of how benefits are distributed among participants," Professor Hong said.

"The government should take a hard look at whether price controls help both the small business owners concerned and consumers," said Kim Dae-jong, a professor in the College of Business Administration at Sejong University. "Artificially controlling prices does not fundamentally solve market problems. It can undermine the market's ability to set prices autonomously and create new unintended consequences."

These discussions point to the need for a regulatory impact assessment to come first. "Policy outcomes should be assessed not only by the extent to which nominal fee rates are reduced, but also by whether the actual profits retained by small business owners improve steadily," said Ha Myung-jin, secretary-general of the Korea Online Shopping Association. "If additional price regulations, such as fee caps or mandatory preferential fee rates, are considered, a regulatory impact assessment based on domestic market data should come first."

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