Market survey
In several stages, the AFCA requested data and information from the two strongest platforms in the market, Foodora and Lieferando, as well as from 23 other ordering services and platforms.
In addition, around 2,500 restaurants in Vienna that were listed on the platforms were invited to participate in a voluntary survey.
Market developments in recent years
The Austrian market for online food delivery platforms has developed dynamically in recent years. Online food delivery platforms have become an important factor in Austria’s restaurant sector. The market has seen both entries and exits.
Uber Eats exited the Austrian market in 2019. In the following years, Foodora (formerly Mjam) and Lieferando were the only two platforms operating throughout Austria. The Austrian market gained another competitor with Wolt’s market entry in 2023. Wolt initially launched its services in Vienna and gradually expanded into other cities in the following years.
Results of the sector inquiry
As part of its sector inquiry, the AFCA analysed the different business models of platforms and ordering services, market structures, the platforms’ market positions and their conduct relevant to competition.
“Digital platforms use innovative solutions to efficiently bring restaurants and customers together and drive inoovation in the restaurant sector. However, problems arise when the market power of individual platforms becomes so entrenched that the competitive balance is lost. Increasing dependence of restaurants can have a negative impact on prices, choice and the working conditions of delivery riders. We have initiated investigations into suspected abuse of a dominant position,” explains Natalie Harsdorf, Director General of the AFCA.
The AFCA’s inquiry presents the following analysis of the market:
Importance of online food delivery platforms
Restaurants generate a significant proportion of their turnover through the two established platforms Foodora and Lieferando. This proportion is particularly high in Vienna. On average, the restaurants surveyed in Vienna generate 25% to 30% of their total turnover from online orders placed via platforms (as at 2023).
High market concentration and barriers to entry
The two platforms Foodora (market share of approximately 50–60%) and Lieferando (approximately 40–50%) hold strong market positions in Austria. However, the market shares of these two established platforms differ geographically. Broadly speaking, Foodora has a particularly strong market share in Vienna, while Lieferando is particularly strong in the rest of Austria.
The market is characterised by significant barriers to entry for potential new competitors. Indirect network effects (e.g. a larger number of restaurants makes a platform more attractive to end customers, while conversely a larger number of end customers makes a platform more attractive to restaurants), high market entry costs and conduct by established platforms that is relevant to competition make successful market entry more difficult or may even prevent it.
Advertising on the platforms
Given the need to be as visible as possible on online food delivery platforms, restaurants are increasingly purchasing expensive advertising services from the platforms. Many restaurants have shifted their advertising expenditure from other channels to the platforms. As a result, these restaurants lose visibility elsewhere, for example in search engines or on social media, meaning that they increasingly lose alternative distribution options to the platforms. Consequently, in addition to rising distribution costs on the platforms, restaurants also become increasingly dependent on them.
The AFCA identified the following conduct relevant to competition:
Exclusivity agreements
The AFCA’s inquiry found that, in some cases, restaurants are not permitted to be active on competing platforms. On the one hand, restaurants receive better contractual terms in return for contractually agreed exclusivity arrangements. This particularly affects well-known restaurants with high sales volumes.On the other hand, there are indications that restaurants’ participation in profitable discount campaigns offered by platforms is conditional on suspending their offering on competing platforms for the duration of the campaign. The data available to the AFCA show that the number and scale of Foodora’s discount campaigns increased sharply at the same time as Wolt entered the Vienna market. Exclusivity agreements are not necessarily prohibited under competition law. However, they may raise competition concerns where dominant companies use them to make market access more difficult for competitors or to significantly restrict competition.
Most-favoured-nation clauses
Most-favoured-nation clauses prevent restaurants from offering their services at lower prices on their own online channels (narrow clauses) or on other platforms (wide clauses), which may weaken price competition.The contracts of one platform contain most-favoured-nation clauses. These relate to restaurants’ own online channels (narrow most-favoured-nation clauses) and apparently are not consistently enforced in practice. While there are no indications that these clauses have significant effects on competition, their economic necessity should nevertheless be questioned.
Unfavourable terms and lack of transparency
Unfavourable terms and a lack of transparency may constitute exploitative abuse. The market survey showed that platforms made unilateral changes to contracts and that restaurants had no opportunity to negotiate contractual terms.
One restaurant surveyed described the relationship between platforms and restaurant partners in following terms: “Lieferando and Foodora are the strongest players, and somehow we are forced to work with them. I feel like a worker rather than a partner.”
Some provisions in the general terms and conditions of the established platforms are to the detriment of restaurants. For example, the general terms and conditions of one platform provide for penalties/cancellation fees of up to EUR 10.00, for instance where preparation takes longer than stated on the order slip or where orders are not accepted or are rejected. The restaurants surveyed criticised these high penalties. When asked about this, the platform explained that such fees were intended to prevent negative customer experiences, for example as a result of cancellations.
Communication with platforms – rights under the Digital Services Act
Around one third of the restaurants surveyed expressed dissatisfaction with communication and the limited accessibility of the platforms. One platform explained that the communication problems could be due to peaks in demand typical of the business and stated that it intended to address these issues. If a platform does not provide its users with adequate means of contacting it directly and efficiently, this may be contrary to the requirements of the European Digital Services Act.
In Austria, the Austrian Communications Authority (KommAustria), in its capacity as Digital Services Coordinator, is responsible for supervising compliance with the Digital Services Act. Restaurants affected by a lack of, or delays in, communication with the platforms may submit a complaint directly to KommAustria. KommAustria provides all information on complaints under the Digital Services Act on its website at beschwerde.rtr.at.
The AFCA will make the results of the sector inquiry available to KommAustria.
Investigations
The AFCA has initiated investigations into suspected abuse of a dominant position.
Investigations enable the AFCA to comprehensively establish the facts relevant under competition law. They may result in the initiation of court proceedings, but may also result in the proceedings being discontinued. The presumption of innocence applies until a final and binding decision has been issued.
Feedback on the sector inquiry
You are welcome to send your comments and suggestions regarding the sector inquiry by email to wettbewerb[at]bwb.gv.at.
Specific complaints may be submitted online via the AFCA website under “Submit a complaint” or anonymously using the AFCA’s whistleblowing system
Sector Inquiry into Online Food Delivery Platforms – Final Report (only in German available)