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Competition panel investigating online food delivery sector

Competition panel investigating online food delivery sector

Source: Business Times
Article Date: 12 Oct 2019
Author: Claudia Chong

CCCS looking into use of exclusive agreements and refusal of service by such operators and virtual kitchens.

The Competition and Consumer Commission of Singapore (CCCS) has commenced investigations into the online food delivery and virtual kitchens sectors, with an eye on the use of exclusive agreements and refusal of service by players to block competition.

The investigation, which comes amid tension among some industry players, is focused on two types of conduct, said the competition watchdog in response to queries from The Business Times. One involves exclusive agreements which prevent food and beverage (F&B) tenants of virtual kitchens from using the online food delivery services of competitors.

The other involves the refusal to supply online food delivery services to F&B tenants of virtual kitchens either run or owned by competitors.

"Third-party feedback indicated that it is important for F&B businesses to have access to multiple online food delivery services in order to reach a wider consumer base," said CCCS.

The commission's actions follow a spat between independent virtual kitchen operator Smart City Kitchens (SCK), which is linked to ousted Uber chief executive Travis Kalanick, and delivery providers Deliveroo and GrabFood.

In July, SCK filed a formal complaint with CCCS, alleging that Deliveroo and GrabFood disabled existing food delivery services and halted new services for restaurants using SCK's shared kitchen in Tampines.

In response, Deliveroo said it has not informed any restaurant partner that they cannot work with SCK as the firm is currently still in discussions with SCK, while GrabFood said SCK's kitchen location was not optimal, hence the vendors were rejected from GrabFood's platform. The merchants within SCK's kitchen continue to have access to foodpanda's delivery services.

The meteoric rise of the food delivery sector has led to the growth of virtual kitchens, also called cloud kitchens. In Singapore, food delivery operators such as Deliveroo and foodpanda have built a total of five kitchens around the island to capture demand in underserved areas. F&B outlets housed within these kitchens can only serve the users of the respective delivery providers, BT understands.

GrabFood will soon open its own kitchen in Singapore. It said on Tuesday that it plans to launch more than 50 GrabKitchens in five markets, including the Philippines and Singapore, by year-end.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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