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AFCA launches inquiry into online food delivery platforms

Major digital and technology companies with outstanding international market power have been at the centre of public debate in recent years. A debate that has subsequently been picked up by politicians and competition authorities. However, problematic practices are not restricted to big tech. Competition is also an issue on medium-sized platforms that are often targeting more narrowly defined markets.

Since the COVID-19 pandemic, online delivery platforms for food and beverage with delivery service have become increasingly popular for consumers, as well as for restaurants, which use them as a sales channel. After UberEats’ market exit in Austria, mjam GmbH (Mjam) and Lieferando.at (Lieferando) have become the only two considerable providers in Vienna. They offer digital marketplaces where several user groups can connect with each other (so-called platform sides). In particular restaurants and end consumers are relevant in this case.

Positive network effects are realized between these platform sides:

Restaurants are more likely to offer their food on the platform if they can expect many end consumers to be on the platform too. Conversely, potential end consumers are more likely to use the platform if it gives them a greater choice. The platform users also include delivery messengers (so-called riders). Markets in which network effects play a big role tend to be highly concentrated.

Possible competition issues arising from high market concentration in online food delivery platforms:

  • Exclusivity clauses
  • Most-favoured nation clauses
  • Self-preferencing of own platform’s products
  • Non-transparent or discriminatory ranking
  • Entry barriers for potential market participants
  • Switching costs for restaurants and end consumers
  • Other restrictions on managerial decisions of restaurants.

General inquiry into an economic sector

The Austrian Federal Competition Authority (AFCA) may investigate economic sectors in response to general developments. The aim is to identify any structural factors that might indicate a distortion of competition. In the event of specific suspicions of anti-competitive behaviour, the AFCA may use other investigative tools or initiate legal proceedings.

The AFCA is now launching a new market inquiry, surveying Viennese restaurants and takeaway companies to get a clear understanding of how these platforms work and to assess whether there are any impediments to well-functioning competition.

If you are a third party and aware of competition issues, please contact the AFCA anonymously via our whistleblowing system or directly by email at wettbewerb[at]bwb.gv.at.