Probe into online food delivery sector

Smart City Kitchens complained to the CCCS in July. Its tenants said that they had been blocked from being listed on two of the three major food delivery services in Singapore - Deliveroo and GrabFood.
Smart City Kitchens complained to the CCCS in July. Its tenants said that they had been blocked from being listed on two of the three major food delivery services in Singapore - Deliveroo and GrabFood.ST FILE PHOTO
Smart City Kitchens’ general manager Warren Tseng (above), commenting on news of the investigations, said “we remain confident that the CCCS will take the appropriate measures to promote fair and healthy competition between start-ups and businesses in Sin
Smart City Kitchens’ general manager Warren Tseng (above), commenting on news of the investigations, said “we remain confident that the CCCS will take the appropriate measures to promote fair and healthy competition between start-ups and businesses in Singapore to the benefit of its consumers”.ST FILE PHOTO

Competition watchdog looks into kitchen operator's complaint about being shut out

Singapore's competition watchdog has started investigations into the online food delivery and virtual kitchen sectors, following 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 yesterday it will focus on conduct involving the use of exclusive agreements, which prevent tenants of shared kitchens from using the online food delivery services of their landlords' rivals.

Also, it will probe the refusal of delivery service providers to let tenants of kitchens run or owned by competitors be listed on their app.

"Third-party feedback indicated that it is important for food and beverage (F&B) businesses to have access to multiple online food delivery services to reach a wider consumer base," the CCCS added in an update on the row.

The issue is whether F&B businesses renting kitchen space for delivery operations are being shut out from using the delivery services of their landlords' rivals, thereby limiting their reach.

It arose following Smart City Kitchens' complaint to the CCCS in July, after its tenants found themselves blocked from being listed on two of the three major food delivery services in Singapore. This happened shortly after they set up shop.

The trio are GrabFood, foodpanda and Deliveroo. Both foodpanda and Deliveroo operate shared kitchens in Singapore. GrabFood does so in Indonesia, Thailand and Vietnam, but has plans to introduce the concept in Singapore.

Smart City Kitchens' general manager Warren Tseng, commenting on news of the investigations, said "we remain confident that the CCCS will take the appropriate measures to promote fair and healthy competition between start-ups and businesses in Singapore to the benefit of its consumers.

Smart City Kitchens, which is linked to ousted Uber chief executive Travis Kalanick, opened a 13,000 sq ft facility in Tampines in June, touting itself as the first operator here to be unaffiliated to a delivery service.

It houses 30 individual kitchens which F&B businesses rent to prepare food for delivery.

Tenants of Smart City Kitchens told The Straits Times in July 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, they said.

The tenants are, however, listed on foodpanda.

The CCCS told The Straits Times in July that it was looking into the matter. Yesterday, in an update, it said industry feedback had prompted it to start investigations.

 
 
 
 

Noting that shared kitchens benefit consumers, it said the kitchens can also serve as a test bed for entrepreneurs.

They allow businesses to expand or create new brands without the costs of a dine-in space. Such facilities also enable users of food delivery services to order from multiple eateries at once.

GrabFood launched a feature on its app in August that lets users order pre-made dishes from popular hawker stalls, which are stored in warmers at five "Hawker Hubs" that it operates across the island for delivery.

Smart City Kitchens' general manager Warren Tseng, commenting on news of the investigations, said "we remain confident that the CCCS will take the appropriate measures to promote fair and healthy competition between start-ups and businesses in Singapore to the benefit of its consumers".

Deliveroo and GrabFood, contacted yesterday night, did not respond by press time.

The CCCS said that industry players and other interested parties with concerns or relevant information can help in the investigations by e-mailing cccs_feedback@ cccs.gov.sg.

A version of this article appeared in the print edition of The Straits Times on October 12, 2019, with the headline 'Probe into online food delivery sector'. Print Edition | Subscribe