Taiwan’s Fair Trade Commission (FTC) has blocked Uber Technologies’ $950 million acquisition of Delivery Hero’s Foodpanda operations on the island, citing anti-competitive concerns. The FTC announced the decision on Wednesday, highlighting that the merger would negatively impact market competition.
Concerns Over Market Dominance
The FTC explained that UberEats currently faces significant competition from Foodpanda in Taiwan. Vice Chairman Chen Chih-min stated, “In the food delivery platform market, UberEats’ main competitive pressure comes from Foodpanda. The merger would eliminate this competitive pressure.”
He further noted that post-merger, the combined market share of the two companies in Taiwan would exceed 90%. This dominance would reduce competition, potentially leading to higher prices for consumers and increased commissions for restaurants. The commission concluded that the merger’s negative effects on competition outweighed any potential economic benefits, and no corrective measures could adequately address these concerns.
Options for Uber and Delivery Hero
Following the FTC’s decision, Delivery Hero stated that Uber could either appeal the ruling or terminate the acquisition. Uber and Foodpanda have not yet commented on the decision, as the announcement came outside regular business hours.
Uber and Delivery Hero originally announced the Taiwan deal in May, alongside a separate agreement for Uber to purchase $300 million in newly issued shares of Delivery Hero. The taxi company anticipated the acquisition would contribute at least $150 million annually to its delivery business’s adjusted core profit within a year of closing, initially projected for the first half of 2025.
Impact on Taiwan’s Food Delivery Market
Online food delivery platforms represent only a small portion of Taiwan’s broader food delivery market. However, the FTC’s decision reflects concerns over the potential consolidation of market power. Foodpanda’s operations in Taiwan were reportedly break-even in terms of adjusted core earnings for the 12 months ending March 31, 2024.
The blocked merger underscores Taiwan’s commitment to maintaining fair competition within its markets, ensuring consumers and businesses benefit from competitive practices. Whether Uber and Delivery Hero will pursue an appeal remains to be seen.
