Taiwan has blocked Uber Technologies’ purchase of Delivery Hero’s Foodpanda business on the island.
The value of the mentioned deal, which was blocked, is $950 million. The decision to block the implementation of this business agreement was made due to concerns about possible anticompetitive practices. The relevant information was published by the Fair Trade Commission (FTC) on Wednesday, December 25th.
Uber and Foodpanda did not immediately respond to media requests for comment on the blocking of the deal. Delivery Hero released a statement in which it was noted that Uber can either appeal the commission’s decision or terminate the acquisition deal.
At a media briefing, the FTC stated that in the mentioned case, the negative consequences of the merger would be more significant than the economic benefits. It was also noted separately that corrective measures would not be able to address the competition concerns.
Chen Chih-min, vice chairman of the FTC, stated that in the market of food delivery platforms, the main competitive pressure on UberEats comes from Foodpanda. It was also noted that the merger would eliminate competitive pressure.
Moreover, Chen Chih-min stated that post-merger, UberEats would be less constrained by competition, giving it more incentive to raise prices for consumers and even increase commissions for restaurant operators. Besides, it was noted that after the merger, the combined market share of both companies in Taiwan would exceed 90%.
Uber and Delivery Hero announced the mentioned deal in May. Also in this case, a separate agreement was provided for Uber to purchase $300 million worth of newly issued shares of the food delivery firm.
Uber expected the specified deal to contribute at least $150 million to the annual adjusted core profit of its delivery business. The company assumed that the corresponding result would be recorded within a year after the implementation of the specified business agreement.
It is worth noting that online platforms are only a small fraction of Taiwan’s food delivery market, which is a highly competitive space.
Foodpanda’s operations on the island were break-even in terms of adjusted core earnings for the 12 months ended March 31, the current year.
As we have reported earlier, Uber Eats Launches Live Location Sharing.
