Federal competition authority investigates Foodora

The Austrian Federal Cartel Office has initiated formal investigations into Foodora over allegations of abuse of dominant market power in the online food delivery sector. The probe follows a completed market study that identified concerns regarding the dominance of platforms such as Foodora and Lieferando, which together control approximately 90 to 100 percent of the domestic market. According to the Federal Cartel Office (BWB), restaurants increasingly depend on these services, with some earning up to 25 to 30 percent of their revenue through online platforms. The authority criticized exclusive agreements, strict price clauses, unilateral contract changes, and penalty fees imposed on restaurants. These findings were partially forwarded to KommAustria, the regulatory body responsible for enforcing the European Union's Digital Services Act (DSA). The investigation was launched after the BWB concluded its examination of the online food delivery market, which began in March 2023. During this period, the authority surveyed around 2,500 gastronomic businesses in Vienna. The results revealed several problematic practices, including exclusivity clauses that required restaurants to pause operations on competing platforms in exchange for better contract terms. This issue became more pronounced following the entry of Wolt, a new player in the market launched in 2023. Additionally, tight price clauses prevented local eateries from offering meals cheaper on their own online channels. The BWB questioned the economic necessity of such restrictions. Restaurants also reported instances of one-sided contract modifications and penalties of up to €10 for delays in meal preparation. Approximately one-third of the surveyed businesses complained about poor accessibility, prompting the BWB to share its findings with KommAustria for further review under the DSA. The investigation does not conclude with mere recommendations but marks the beginning of formal proceedings against suspected abuse of a dominant market position. These proceedings allow the BWB to thoroughly investigate potential cartel law violations. They could lead to legal action before the Competition Court or result in the case being dropped. The principle of innocence applies, emphasized by the BWB. Foodora confirmed that the BWB has initiated an investigation and stated it would fully cooperate with the authority while carefully reviewing the outcomes. However, the company clarified that the initiation of an investigation does not imply any actual violation of competition laws. The company expressed willingness to engage with the BWB and await the final conclusions of the probe. According to the BWB’s General Director, Natalie Harsdorf, digital platforms have brought innovative solutions that efficiently connect restaurants with customers, providing new impulses for the gastronomy industry. However, she warned that the consolidation of market power among certain platforms can disrupt competitive balance, negatively affecting prices, offerings, and working conditions for delivery personnel. The BWB highlighted the need to maintain fair competition and prevent excessive dependence of restaurants on specific platforms. The market structure shows that Foodora dominates the Viennese market with a share of 50 to 60 percent, while Lieferando leads in other parts of Austria with around 40 to 50 percent. Although Wolt has been gradually expanding since its launch in 2023, the market still presents significant barriers to entry. For many restaurants, online delivery services have become a crucial sales channel, contributing significantly to their overall revenue. The BWB’s findings suggest that the current market dynamics may require regulatory intervention to ensure fair competition and protect the interests of both restaurants and consumers. The ongoing investigation will determine whether the alleged practices constitute a breach of competition laws and what measures, if any, should be taken to address them. The outcome of this process will have implications for the future of the online food delivery sector in Austria.