Problem Question for Competition Law
2. Delivery of takeaway food from restaurants has been revolutionised by the development of apps, allowing consumers to order food through their smartphones in return for a small delivery fee. While delivery has been possible for decades through direct phone calls to restaurants, research shows that most users of takeaway food delivery apps do not see phone calls as alternatives: apps are much simpler, have a broader array of restaurants available without reliance on local knowledge, and users of apps, who tend to be young adults, are generally reluctant to speak to strangers by phone call. Creating a delivery app is a difficult and expensive process. It requires considerable funding by investors, development by technical experts, a significant number of delivery drivers, and lengthy negotiations with takeaway restaurants to convince them to accept orders through the app (plus to agree a fee to be charged by the platform to each restaurant). Because of language differences and the need to establish relationships with local restaurants, takeaway food delivery apps generally compete with each other on national markets.
Takeawoo is a UK-based company that operates one of the most successful takeaway food delivery apps, available in various countries. Takeawoo is however concerned about its performance in Germany, where it competes against three other takeaway food delivery apps: JustChew, MegaEats, and Monkeys. From January to April 2023, JustChew was used for 35% of takeaway food orders by app in Germany, with 35% via MegaEats, 20% by Takeawoo, and 10% by Monkeys.
Takeawoo’s share of the German market is lower than in other countries and it blames this on Monkeys. Monkeys is a recent start-up only available in Germany. It launched its takeaway food delivery app in January 2022, but has since grown rapidly, taking more users from Takeawoo than other rival apps (in January 2022, the shares of German delivery app transactions were 36% for JustChew, 36% for MegaEats, and 28% for Takeawoo). Takeawoo believes that Monkeys has been more successful in acquiring its former users because both of them have arrangements with significantly more Korean restaurants than JustChew and MegaEats, several of which agreed in 2022 to only be available for delivery via Monkeys. Monkeys also acquired prominence upon launch in Germany through being the first takeaway food delivery app to allow users to pay with cryptocurrency.
Takeawoo is considering whether to purchase 100% of the shares and voting rights in Monkeys, with a plan to integrate their two apps into a single app for ordering takeaway food in Germany. It believes that this would be of considerable benefit to consumers for several reasons. First, it would combine into a single app all of the Korean restaurant partners who are currently split between delivering via Takeawoo or Monkeys. Second, Takeawoo would be able to roll out Monkey’s technology for cryptocurrency transactions to its own current users. Third, Takeawoo is concerned that, owing to Monkeys not yet making a profit, relying instead upon rounds of investor funding, its expertise with processing cryptocurrency payments would be lost were Monkeys to go bankrupt. More generally, Takeawoo believes that the combined app would be better placed to compete with JustChew. Takeawoo is less concerned about competition from MegaEats, as there are rumours that it is struggling to sign up additional delivery drivers.
Assuming that the turnover threshold for a ‘Community dimension’ under Article 1(2) of the EU Merger Regulation (139/2004) is met, please advise Takeawoo as to the steps for obtaining clearance from the European Commission and the likelihood that its proposal will be permitted or prohibited.
END OF ASSESSMENT
2. Delivery of takeaway food from restaurants has been revolutionised by the development of apps, allowing consumers to order food through their smartphones in return for a small delivery fee. While delivery has been possible for decades through direct phone calls to restaurants, research shows that most users of takeaway food delivery apps do not see phone calls as alternatives: apps are much simpler, have a broader array of restaurants available without reliance on local knowledge, and users of apps, who tend to be young adults, are generally reluctant to speak to strangers by phone call. Creating a delivery app is a difficult and expensive process. It requires considerable funding by investors, development by technical experts, a significant number of delivery drivers, and lengthy negotiations with takeaway restaurants to convince them to accept orders through the app (plus to agree a fee to be charged by the platform to each restaurant). Because of language differences and the need to establish relationships with local restaurants, takeaway food delivery apps generally compete with each other on national markets.
Takeawoo is a UK-based company that operates one of the most successful takeaway food delivery apps, available in various countries. Takeawoo is however concerned about its performance in Germany, where it competes against three other takeaway food delivery apps: JustChew, MegaEats, and Monkeys. From January to April 2023, JustChew was used for 35% of takeaway food orders by app in Germany, with 35% via MegaEats, 20% by Takeawoo, and 10% by Monkeys.
Takeawoo’s share of the German market is lower than in other countries and it blames this on Monkeys. Monkeys is a recent start-up only available in Germany. It launched its takeaway food delivery app in January 2022, but has since grown rapidly, taking more users from Takeawoo than other rival apps (in January 2022, the shares of German delivery app transactions were 36% for JustChew, 36% for MegaEats, and 28% for Takeawoo). Takeawoo believes that Monkeys has been more successful in acquiring its former users because both of them have arrangements with significantly more Korean restaurants than JustChew and MegaEats, several of which agreed in 2022 to only be available for delivery via Monkeys. Monkeys also acquired prominence upon launch in Germany through being the first takeaway food delivery app to allow users to pay with cryptocurrency.
Takeawoo is considering whether to purchase 100% of the shares and voting rights in Monkeys, with a plan to integrate their two apps into a single app for ordering takeaway food in Germany. It believes that this would be of considerable benefit to consumers for several reasons. First, it would combine into a single app all of the Korean restaurant partners who are currently split between delivering via Takeawoo or Monkeys. Second, Takeawoo would be able to roll out Monkey’s technology for cryptocurrency transactions to its own current users. Third, Takeawoo is concerned that, owing to Monkeys not yet making a profit, relying instead upon rounds of investor funding, its expertise with processing cryptocurrency payments would be lost were Monkeys to go bankrupt. More generally, Takeawoo believes that the combined app would be better placed to compete with JustChew. Takeawoo is less concerned about competition from MegaEats, as there are rumours that it is struggling to sign up additional delivery drivers.
Assuming that the turnover threshold for a ‘Community dimension’ under Article 1(2) of the EU Merger Regulation (139/2004) is met, please advise Takeawoo as to the steps for obtaining clearance from the European Commission and the likelihood that its proposal will be permitted or prohibited.
END OF ASSESSMENT
2. Delivery of takeaway food from restaurants has been revolutionised by the development of apps, allowing consumers to order food through their smartphones in return for a small delivery fee. While delivery has been possible for decades through direct phone calls to restaurants, research shows that most users of takeaway food delivery apps do not see phone calls as alternatives: apps are much simpler, have a broader array of restaurants available without reliance on local knowledge, and users of apps, who tend to be young adults, are generally reluctant to speak to strangers by phone call. Creating a delivery app is a difficult and expensive process. It requires considerable funding by investors, development by technical experts, a significant number of delivery drivers, and lengthy negotiations with takeaway restaurants to convince them to accept orders through the app (plus to agree a fee to be charged by the platform to each restaurant). Because of language differences and the need to establish relationships with local restaurants, takeaway food delivery apps generally compete with each other on national markets.
Takeawoo is a UK-based company that operates one of the most successful takeaway food delivery apps, available in various countries. Takeawoo is however concerned about its performance in Germany, where it competes against three other takeaway food delivery apps: JustChew, MegaEats, and Monkeys. From January to April 2023, JustChew was used for 35% of takeaway food orders by app in Germany, with 35% via MegaEats, 20% by Takeawoo, and 10% by Monkeys.
Takeawoo’s share of the German market is lower than in other countries and it blames this on Monkeys. Monkeys is a recent start-up only available in Germany. It launched its takeaway food delivery app in January 2022, but has since grown rapidly, taking more users from Takeawoo than other rival apps (in January 2022, the shares of German delivery app transactions were 36% for JustChew, 36% for MegaEats, and 28% for Takeawoo). Takeawoo believes that Monkeys has been more successful in acquiring its former users because both of them have arrangements with significantly more Korean restaurants than JustChew and MegaEats, several of which agreed in 2022 to only be available for delivery via Monkeys. Monkeys also acquired prominence upon launch in Germany through being the first takeaway food delivery app to allow users to pay with cryptocurrency.
Takeawoo is considering whether to purchase 100% of the shares and voting rights in Monkeys, with a plan to integrate their two apps into a single app for ordering takeaway food in Germany. It believes that this would be of considerable benefit to consumers for several reasons. First, it would combine into a single app all of the Korean restaurant partners who are currently split between delivering via Takeawoo or Monkeys. Second, Takeawoo would be able to roll out Monkey’s technology for cryptocurrency transactions to its own current users. Third, Takeawoo is concerned that, owing to Monkeys not yet making a profit, relying instead upon rounds of investor funding, its expertise with processing cryptocurrency payments would be lost were Monkeys to go bankrupt. More generally, Takeawoo believes that the combined app would be better placed to compete with JustChew. Takeawoo is less concerned about competition from MegaEats, as there are rumours that it is struggling to sign up additional delivery drivers.
Assuming that the turnover threshold for a ‘Community dimension’ under Article 1(2) of the EU Merger Regulation (139/2004) is met, please advise Takeawoo as to the steps for obtaining clearance from the European Commission and the likelihood that its proposal will be permitted or prohibited.
END OF ASSESSMENT