foodpanda fined for 'limiting business' of Nando's, Peyala

The Bangladesh Competition Commission has fined popular online food delivery platform foodpanda Tk10 lakh for violating the Competition Act 2012. 

The commission passed the verdict on 15 January over a complaint filed three years ago by MGH Restaurants Pvt Ltd against foodpanda.

According to the complaint, in 2018, MGH Restaurants and foodpanda agreed on a fixed commission rate for deliveries. But during the pandemic's business downturn, foodpanda allegedly used its dominant market player position as leverage and violated the agreement terms.

Threatening higher commission rates or limited reach to customers, foodpanda pressured MGH, struggling with losses at that time, to accept new terms. Despite MGH's pleas not to lower its reach, foodpanda unilaterally lowered the delivery radius of MGH restaurants and even suspended them from the platform.

Delivering the verdict, Competition Commission Chairman Pradip Ranjan Chakraborty said, "In the investigation, it was found that foodpanda limited the business of Nando's and Peyala, two of the popular MGH Restaurants brands, by abusing its dominant position in the local market." 

On top of the Tk10 lakh fine for violating Sections 16 (1) and 16 (2) (KHA) of the Competition Act 2012, the commission prohibited foodpanda from stopping restaurants from making agreements with other food delivery platforms.

The development marks a significant step in ensuring fair competition within the rapidly evolving food delivery sector in Bangladesh. 

The Competition Commission's decision aims to foster a more competitive marketplace while safeguarding the interests of both consumers and restaurants.

foodpanda's response

Following the verdict, foodpanda on 15 January issued a statement, in which its Bangladesh Co-Founder and Managing Director Zubair BA Siddiky said, "Our lawyers are overseeing the matter. We will appeal against this verdict.

"We have the utmost respect for the law of the land but it is our belief that foodpanda's position in the industry has not been adequately reflected in the order based on the facts presented."

The statement said, "We are reviewing the order thoroughly and intend to appeal against this decision in accordance with due process of law.

"Foodpanda remains committed to its customers, partners and the food delivery ecosystem.

"We are dedicated to delivering quality services, fostering innovation, and contributing to the growth of the food delivery industry."

The complaint against foodpanda

In its complaint dated 24 December 2020, MGH Restaurants said it signed an agreement with foodpanda Bangladesh in 2018 under which foodpanda would deliver their food to customers with a fixed commission rate.

During the Covid pandemic and nationwide lockdown, the restaurant business suffered a stiff decline, and within an unthinkable short period, many restaurants started fighting for their survival.

MGH alleged that foodpanda, leveraging its market dominance as a food delivery company, threatened restaurants, including MGH Restaurants, to increase the commission rate, saying that it would otherwise reduce the delivery radius.

Amid huge losses, MGH Restaurants at that time requested foodpanda not to increase the commission rate and not to reduce the delivery radius. However, foodpanda did not consider the plea but rather violated the existing agreement by arbitrarily and illegally reducing MGH Restaurants' delivery radius and suspending them from the online platform, the complaint reads.