KUALA LUMPUR: The possible sale of foodpanda by Delivery Hero as early as December this year has sparked fears of a possible monopoly and required the Malaysian Competition Commission (MyCC) to immediately investigate the matter.
Grab, which previously took over Uber's operations in Asean, is expected to pay a little more than one billion euros (about RM5 billion) for foodpanda's Asian unit.
In Southeast Asia, foodpanda's operation in Malaysia is one of seven countries, with the others being Cambodia, Laos, Myanmar, the Philippines, Singapore and Thailand. In each of these markets, online food delivery platforms command a large market share of between 30-40 per cent.
This makes foodpanda the second largest food delivery company in Southeast Asia.
However, news of the potential acquisition of foodpanda by Grab has raised concerns that Singapore-based company Grab will create a monopoly in p-hailing (delivery of food, drinks and packages).
Industry analyst Wan Mohd Farid Wan Zakaria from UiTM's Faculty of Management and Business said the implications of Grab's monopoly could potentially lead to a large influence on not only prices but also the market structure of food delivery services.
"One of the most immediate effects of monopoly is price control. Without competition, a monopolist can set prices at will, making it scarce without choice and causing consumers to pay whatever price is set.
"When this happens, prices will likely be higher, as consumers have no alternative to switch to other suppliers. For example, imagine consumers only have the choice of one flavour of ice cream, one model of car, or one choice of mobile phone.
"Lack of variety in products and services can stifle innovation and hinder consumers' ability to find options that truly meet their needs," he said.
Significant implications
The potential acquisition of foodpanda by Grab could have significant implications for the food delivery market in Southeast Asia, said Wan Farid.
If Grab acquires foodpanda's Asia unit, it will indeed strengthen its position as a major player in the online food delivery industry.
He outlined some important things to consider:
Market Consolidation:
Grab, which took over Uber's operations in Asean, has become a dominant player in the transportation and food delivery space. Acquiring foodpanda's Asian unit will further strengthen its presence in the region, making it a significant force in the food delivery market.
Monopoly Concerns:
Concerns have been raised about Grab potentially creating a monopoly in the "p-hailing" sector (parcel delivery and food delivery). Monopolies can limit competition and potentially lead to higher prices for consumers and reduced choice. Regulators and competition authorities can scrutinize these potential acquisitions to ensure they do not harm competition.
Marketing department:
Foodpanda has a large market share of 30-40 per cent in several Southeast Asian countries, including Malaysia, Cambodia, Laos, Myanmar, the Philippines, Singapore and Thailand. A combination of Grab and foodpanda could significantly increase their collective market share.
Regulatory Approvals:
Any acquisition of this scale requires regulatory approval, and it is common for competition authorities to conduct comprehensive reviews to assess potential antitrust issues. The outcome of such a review may affect whether and under what circumstances the acquisition proceeds.
Impact on Consumers and Restaurants:
The acquisition could affect both consumers and restaurants. Consumers may see changes in pricing, delivery options and availability of food options. Restaurants may face new terms and conditions when partnering with larger delivery platforms.
Potential for Synergy:
On the positive side, if the acquisition is successful, Grab and foodpanda may leverage synergies to improve their services, expand their reach and invest in technology and infrastructure, which can benefit both customers and restaurants.
In summary, Wan Mohd Farid said the potential acquisition of foodpanda by Grab is an important development in the food delivery industry. It raises both opportunities and concerns related to market competition and consumer choice.
The outcome will depend on regulatory approvals and the strategy pursued by Grab and foodpanda after the acquisition, if it actually happens.