Competition watchdog ceases probe into online food delivery and virtual kitchen sectors

Smart City Kitchens complained in July 2019 that it had been shut out by GrabFood and Deliveroo.
Smart City Kitchens complained in July 2019 that it had been shut out by GrabFood and Deliveroo.PHOTOS: ST FILE

SINGAPORE - Singapore's competition watchdog has ceased investigations into the online food delivery and virtual kitchen sectors, which were prompted by a shared kitchen operator's complaint that it had been shut out by Deliveroo and GrabFood.

The Competition and Consumer Commission of Singapore (CCCS) said on Wednesday (Aug 5) that although its investigation has ceased, it will continue to monitor the conduct of market players in the online food delivery and virtual kitchen sectors.

It added that necessary enforcement actions will be taken against any anti-competitive conduct in these sectors.

Virtual kitchens are shared commercial kitchen spaces provided for food and beverage operators for food preparation, predominantly for online food delivery services.

In July last year, shared kitchen operator Smart City Kitchens appealed to CCCS to "help level the playing field" after being shut out by a second food delivery operator just weeks after starting its business.

Smart City Kitchens, which is under a subsidiary of ousted Uber chief executive Travis Kalanick's real estate company City Storage Systems, opened a 13,000 sq ft facility in Tampines in June 2019.

The facility houses 30 individual kitchens that are rented out to F&B operators for delivery operations, but is unaffiliated with a delivery service, making its tenants reliant on the main online food delivery service providers.

A month later, tenants of Smart City Kitchens told The Straits Times that Deliveroo and GrabFood, which had initially agreed to list them on their respective apps, later changed their mind. The two delivery service providers cited the tenants' landlord as the reason.

In addition to providing delivery services for restaurant partners, Deliveroo operated three shared kitchens of its own in July 2019, while GrabFood launched a kitchen space in January this year.

 
 
 

CCCS said it investigated the refusal of food delivery providers to supply online food delivery services to operators using Smart City Kitchens' virtual kitchens.

The competition watchdog added that following its investigation, GrabFood and Deliveroo have started supplying their online food delivery services to F&B operators in Smart City Kitchens's virtual kitchens.

Before the investigation commenced, the operators already had access to delivery services from Foodpanda - which CCCS identified as the third main online food delivery provider in Singapore, after GrabFood and Deliveroo.

"As a result, F&B operators using Smart City Kitchens' virtual kitchens now have the choice of using multiple online food delivery providers to expand their consumer reach," said CCCS.

The competition watchdog also noted that competition in the virtual kitchen sector remains dynamic, with players entering and competing for market share.