Competition watchdog flags concerns over exclusive agreements between restaurants and food delivery services

Chicken wings in a takeaway box meant for delivery.
Chicken wings in a takeaway box meant for delivery.ST PHOTO: GIN TAY

SINGAPORE - The Competition Commission of Singapore (CCS) said on Thursday (Aug 25) that exclusive agreements between restaurants and an unnamed online food delivery service do not currently harm competition but flagged they could be "problematic in future".

As such, CCS said it will "continue to closely monitor the market."

CCS said it launched an investigation following complaints that the online delivery food provider had entered into exclusive agreements with certain restaurants, which prevented them from using other providers' services.

Online food delivery services here included Deliveroo, FeastBump, Foodpanda, Gourmet To Go, UberEats, and What to Eat. They allow customers to browse and order online from a selection of restaurants' menu items for delivery.

CCS said it found that currently, the exclusive agreements have not harmed competition, noting that competing online food delivery providers have expanded significantly over the past year.

It also noted that "after it commenced the investigation, a delivery provider stopped introducing exclusive agreements with restaurants, but at the same time other providers have been using such agreements to gain market share".

CCS said that under the competition law in Singapore, businesses with a dominant market position are prohibited from preventing their competitors from competing effectively or shutting them out of the market through exclusive business practices such as exclusive agreements with their suppliers or customers. If such conduct is found to harm competition, CCS can take enforcement action.

Said CCS chief executive Toh Han Li: "The online food delivery industry is currently vibrant with new entrants competing aggressively and market shares changing significantly.

"In the course of our investigation however, we have noted the use of exclusive agreements by online food delivery providers as one method to attain market shares. 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.

"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.

Mr Toh added that CCS welcomes feedback from restaurants and other industry stakeholders, including whether there are other restrictions impeding competition.