Online food delivery industry 'vibrant', but exclusive agreements may hamper competition

The Competition Commission Singapore (CCS) on Thursday (Aug 25) said the online food delivery industry remains competitive despite the presence of exclusive agreements with restaurants, but these may hamper competition in the future.

Following complaints of alleged anti-competitive practice by an online food delivery provider in Singapore, CCS conducted an investigation and found that the provider had entered into exclusive agreements with certain restaurants, which prevented the restaurants from using other providers' services.

However, since competition has not been harmed, the investigation was ended, it said, adding that it will continue to closely monitor the market as such exclusive agreements could be problematic in the future.   

"Through the investigation, CCS found that currently, the exclusive agreements have not harmed competition, and the industry is competitive," it said in its press release. "Competing online food delivery providers have expanded significantly over the past year.

"CCS notes that after it commenced the investigation, a delivery provider stopped introducing exclusive agreements with restaurants, but at the same time other providers have been using such agreements to gain market share," the regulator added.

CCS Chief Executive Toh Han Li said the online food delivery industry is currently "vibrant with new entrants competing aggressively and market shares changing significantly".

In the event of a provider becoming dominant, however, the presence of such exclusive agreements risks infringing competition law as it would affect the competitive state of the market, Mr Toh added.

"Instead of relying on exclusive business practices, businesses should compete on merit, leading to a more vibrant market with more choices for restaurants and consumers," he suggested.