Woowa Brothers, which is in the process of being sold by its parent company Delivery Hero, has hit a regulatory hurdle.
The Korea Fair Trade Commission (KFTC) recently decided to reject Woowa Brothers' request to begin a consent decree procedure over alleged abuse of market dominance involving Baedal Minjok, raising the likelihood of a fine worth several hundred billion won.
A consent decree allows a company accused of violating the law to propose voluntary corrective measures. If the KFTC, after gathering opinions from interested parties, deems the proposal appropriate, it can close the case without making a final determination on whether the law was broken. Baedal Minjok had offered a voluntary remedy package, including 300 billion won in shared-growth support and various measures to restore competition, but the proposal was ultimately rejected.
Earlier, the KFTC sent a review report last year on allegations that Baedal Minjok required partner restaurants to maintain transaction terms, such as food prices and minimum order amounts, on a so-called 'most-favored treatment' basis equal to those of other delivery apps. It was also found that, starting in May 2024, restaurants that did not comply were excluded from Baemin Club, a membership service that offers free delivery benefits. In addition, the company faced allegations that, since June 2021, it had given preferential exposure to Baemin Delivery restaurants to steer users toward the more profitable service over store delivery, and that it had falsely advertised Baemin Delivery as being faster.
Baedal Minjok applied for consent decree proceedings on all three allegations: the 'most-favored treatment' demand, preferential treatment for Baemin Delivery, and false advertising of delivery times. Its corrective proposal submitted to the KFTC included a three-year shared-growth package worth 300 billion won, including lower commissions for store-delivery partner restaurants. It also proposed restoring competition by scrapping the most-favored treatment demand and pledging not to set similar conditions in the future.
The KFTC reviewed the case but concluded that the application did not meet the requirements to begin consent decree proceedings. As a result, it plans to make a final decision on whether the law was violated and what sanctions should be imposed after further deliberation on the original case.
According to the KFTC, the related sales used as the basis for calculating fines were estimated at about 730 billion won for the most-favored treatment allegation and about 7.78 trillion won for the preferential treatment and false advertising allegations. Since fines can be imposed at up to 6% of related sales, the penalty could reach as much as 510 billion won.
After the KFTC's rejection, Woowa Brothers said in a statement that the scale of the shared-growth support package was large even compared with domestic and overseas consent decree cases that had previously been accepted. It added that it regretted the collapse of a plan to quickly restore market competition and directly support small business owners.
Industry watchers are closely monitoring how the KFTC's decision will affect the sale of Woowa Brothers.
According to the investment banking sector, Delivery Hero recently selected JPMorgan Chase as the lead manager for the sale of Woowa Brothers and began sounding out potential buyers. A shortlist of qualified bidders was drawn up through a preliminary bidding process last month, and due diligence is reportedly under way ahead of the main bid scheduled for next month.
The issue is the price. Delivery Hero's expected sale price is reportedly around 8 trillion won, nearly double the 4.75 trillion won it paid when it acquired the company in 2019. However, some say market sentiment has been mixed.
That is because profitability has been on a downward trend amid rising marketing costs and cutthroat competition. Looking at Woowa Brothers' performance over the past five years from 2021 to 2025, revenue grew from 2.0088 trillion won in 2021 to 5.283 trillion won last year, but operating profit has fallen for two consecutive years after peaking at 699.8 billion won in 2023.
If fines worth several hundred billion won become a reality, the burden would be unavoidable. An industry source said, "Not only would it be a one-off burden, but if a corrective order is issued that forces changes to exposure methods or commission structures, it could further hurt profitability and become a discount factor in valuation."
A Woowa Brothers official said, "It is still difficult to give a specific answer on how we will respond to the KFTC's rejection," and added that, regarding the sale, "it is a matter being handled by Delivery Hero," declining to elaborate further.
Kim So-hyung
