The Office of Trade Competition Commission (OTCC) has published a sector-specific guideline on unfair trade practices for online food delivery businesses, which will be effective on 23 December 2020. The guideline regulates activities between multi-homing food delivery platform operators and restaurants.
The guideline contains a sweeping provision on free and fair treatment, referencing the principles of non-coercion, non-discrimination and non-restriction, with clear standards. The agreement must be made in an ordinary course of business through an advanced written agreement and be justifiable. A large section of the guideline is dedicated to laying out practices of food delivery platforms that may cause damage to restaurants, addressing trade terms that may exist in agreements between platforms and restaurants, for example:
· Commission fee — increasing commission fees without justification, or imposing different commission fees on restaurants without justification;
· Advertising fee — demanding advertising fees but not providing the agreed benefits to the restaurant without justification;
· Exclusive dealing — restricting a restaurant from selling on other food delivery platforms; or imposing penalties for non-compliance with exclusivity obligation;
· Rate parity — obliging a restaurant to set the same price for each of its dish across all sale channels without justification;
· Termination — terminating the agreement with a restaurant after the restaurant has rejected a condition the platform has unfairly imposed on it.
The guideline is a subordinated legislation under section 57 of the Competition Act 2017. Section 57 prohibits any business, regardless of its market share, from unfairly treating another business in the way that causes damage to the other business. The draft guideline underwent a public hearing process in September 2020.