The proposed merger between Uber Eats and Foodpanda in Taiwan
Hung Ou Yang
Brain Trust International Law Firm, Taipei
An uproar in Taiwan followed the announcement by Uber Eats of its intention to acquire Foodpanda. According to data collected by the Taiwanese Fair Trade Commission (FTC), in the past few years, these two food delivery platform giants have a combined market share of nearly 75 per cent or more in Taiwan. The potential merger has attracted a lot attention ever since the announcement at the end of May 2024. If the FTC gives the merger the green light, the concern is always whether the market will be monopolised, thereby affecting the interests of consumers, supermarkets and food delivery workers (couriers).
The FTC started to review the merger in November 2024
On 14 November 2024, the FTC formally announced that the application by Uber Eats, with all the required documents, was submitted on 8 December 2024, requesting authorisation to merge with Foodpanda, and the FTC accepted the request to review the merger. Generally, the FTC is supposed to return its decision within 30 working days and, in the meantime, the merger will not be concluded before such a decision is made. However, on 9 December 2024, the FTC announced that the review period would be extended for 60 working days, in order for it to economically analyse the ‘the disadvantages of anti-competition’ and the ‘overall economic benefits’ related to the proposed merger. According to such a timeframe, the FTC’s final decision will be issued no later than 21 March 2025.
Will the FTC assess the potential risks faced by the couriers?
Guideline 10 in the Merger Guidelines 2023 issued by the United States Department of Justice states that ‘when a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers, creators, suppliers, or other providers’. The well-known White Paper on Competition Policy in the Digital Economy, published by the FTC, does not elaborate its position on the labour market. Thus, in regard to the merger case involving Uber Eats, the issue is whether the FTC will assess the potential risks faced by couriers, where the merger may substantially lessen competition in term of their labour. That is to say, will the FTC assess whether a merger between the buyers of labour, such as Uber Eats and Foodpanda as employers, may substantially lessen competition or whether such a merger will tend to create a monopoly?
In this context, I have already launched an appeal, which aims to encourage the examination of such an issue, since the end of May 2024. In regard to the proposed Uber Eats–Foodpanda merger, it will be a merger between competing buyers in the labour market, which will substantially lessen competition, where the competition between merging buyers is eliminated. In reference to Guideline 10, the FTC should consider whether Uber Eats–Foodpanda’s power would be so strong as to cut or freeze couriers’ wages, slow their wage growth, lead to the exercise of increased leverage in negotiations with the couriers, or lead to the general degradation of the benefits and working conditions currently enjoyed by couriers in Taiwan.
The current predicament is that Taiwan’s Fair Trade Act aims to regulate ‘enterprises’ rather than ‘workers’. Theoretically, Taiwan’s Fair Labor Standards Act, rather than Taiwan’s Fair Trade Act, is used to protect the labourers. The FTC also takes the position that labourers do not fall into the scope of enterprises under Taiwan’s Fair Trade Act. In addition to this, Jhih-Ming Chen, Vice Chair of the FTC, also stated that ‘the reduction of wages is not an issue pertaining to the Fair Trade Act’ when reviewing the Uber Eats–Foodpanda merger at the initial stage.
Here, a possible solution is to make a difference between the ‘subject of regulations’ and the ‘objectives of protection’ under Taiwan’s Fair Trade Act. Although Taiwan’s Fair Trade Act regulates enterprises, its protection-related objectives may not be limited to enterprises. For example, in cases of false advertising, many consumers who are not enterprises are still protected by the Fair Trade Act and such consumers have successfully won claims against several vile manufacturers. Because Taiwan’s Ministry of Labor has raised an objection in writing in regard to the proposed Uber Eats–Foodpanda merger, I am still hope that the FTC will carry out thorough analysis of this issue.
A review of the overall economic benefits
We can also look at the case in this way: ‘couriers’ wages’ and other demands on labour conditions not only involve the rights and interests of couriers, but also the overall development of delivery industries. If the FTC excludes ‘couriers’ wages’ and other demands on labour conditions from the scope of the review of the proposed merger and acquisition, it may cause huge economic and social problems in the future.
In regard to the Uber Eats–Foodpanda merger case, since the ‘disadvantages of anti-competition’ are very obvious, the way to weigh the ‘overall economic benefits’ becomes even more important. When the labour conditions and work environment for workers are material parts of the overall economy, it is reasonable to argue that these factors should be covered by the FTC’s merger review.
This argument should not be alien to the FTC. Just a few years ago, the FTC factored labour market-related issues into its merger review between Cashbox Partyworld KTV and Holiday KTV, and stated that ‘concerns about reducing existing employment opportunities still cannot be eliminated when the applicant argued about integrating human resources through this merger’. The FTC concluded that the proposed merger could not be accepted for multiple reasons, including the employment opportunities-related factor, but this reason was hidden within the FTC’s decision.
Enterprises need to know that short-term commitments will not be sufficient
After filing an application for a merger, applicants may still undertake various future commitments, in order for the FTC to take them into account during the merger review. If the FTC decides not to overrule the application for the merger, it may probably turn those commitments into conditions or burdens to be placed on the merging parties in order to approve the merger. The price issue is definitely the focus of public attention and, in the past, price undertakings have been made by merging enterprises, but the FTC may not necessarily buy it. Why?
Take the proposed merger between Cashbox Partyworld KTV and Holiday KTV as an example, the merging enterprises promised not to increase their prices or reduce any of the service offerings and discounts provided to consumers for a period of five years. However, the FTC held that short-term commitments could not eliminate long-term concerns about the possible anti-competitive effects of such a merger, so the FTC still prohibited the merger. From this point of view, even if an enterprise tries to eliminate doubts in regard to possible price increases after the merger by ‘making a promise not to raise prices’, the FTC may still reject it when that promise is not a long-term deal in their eyes. Having said that, long-term commitments will probably be used as part of the argument for the Uber Eats–Foodpanda merger. Let’s see whether Uber Eats is able to make the FTC a promise that it cannot refuse.