Deliveroo, an online food delivery company headquartered in London, has announced its decision to exit the Hong Kong market after nine years of operation. The company cited intense competition and strategic business considerations as the primary reasons for its departure. Deliveroo’s platform will remain active until April 7, 2025, after which its operations will be shut down.

This move follows Deliveroo’s earlier exits from other markets, including Taiwan in 2020 and Australia in November 2022, where it faced similar challenges of intense competition and a lack of strong market positioning.

As part of its exit strategy, Deliveroo has sold key assets to its local competitor, Foodpanda, including its customer database, technology infrastructure and exclusive partnerships with high-end restaurants. Liquidators have been appointed to manage the closure of its remaining operations.

“This will expand Foodpanda’s offering, providing customers with access to a broader selection of restaurants and grocery businesses, including some previously only available on the Deliveroo platform. Vendors will also benefit from access to a larger customer base,” said Foodpanda’s parent company, Delivery Hero, in a statement.

Foodpanda will acquire key assets from Deliveroo, including its customer database (with preferences and order history) to enhance marketing strategies, proprietary technology (like logistics algorithms and rider management systems) to boost efficiency, exclusive partnerships with high-end restaurants to expand premium offerings, and branding assets (trademarks and marketing materials) to strengthen its market presence.

As Deliveroo winds down its operations, its customers, riders and partner restaurants will be redirected to the Foodpanda platform. The transition is expected to provide Foodpanda users access to a wider range of restaurant and grocery options, potentially boosting the platform’s long-term success.

Hong Kong’s competitive food delivery landscape

Hong Kong’s food delivery market was initially a duopoly, dominated by Foodpanda and Deliveroo after Uber Eats exited in 2021. This changed in 2023 when KeeTa, backed by China’s Meituan, entered the market, creating a triopoly. With Deliveroo’s exit, Foodpanda now stands as the sole major competitor to KeeTa, which is operated by Meituan, China’s largest food delivery platform.

Hong Kong’s food delivery market is relatively small and highly competitive, making it difficult for multiple players to coexist. Deliveroo’s focus on premium pricing and higher-end restaurants may have further alienated it from a market known for its price sensitivity.

Deliveroo’s decision to leave Hong Kong has sparked renewed concerns about market power and antitrust regulations in the city’s digital economy.

According to a report by Johnson Stokes & Master (JSM), a Hong Kong-based law firm, Foodpanda and Deliveroo each held over 40 percent of the market share from 2016 to 2021, jointly accounting for around 90 percent of the market. However, KeeTa’s aggressive entry in 2023, characterized by lower delivery costs and heavy promotions, has significantly disrupted this balance.

In January 2022, the Hong Kong Competition Commission (HKCC) launched an investigation into potential violations of the First Conduct Rule under the Competition Ordinance. This focused on restrictive practices such as exclusivity agreements, price parity clauses, and restrictions on promotional activities.

The HKCC typically considers vertical agreements – deals between businesses at different levels of the supply chain, such as a platform and a restaurant – less harmful to competition than horizontal agreements, which involve direct competitors. However, concerns grow when one or both parties involved hold substantial market power.

With Deliveroo’s exit and Foodpanda’s acquisition of its assets, fears of reduced competition and potential monopolistic behaviour have intensified. Foodpanda’s expanded market dominance could lead to fewer choices for consumers and stricter terms for restaurants, raising alarms about the need for stronger antitrust oversight.

The HKCC’s role in monitoring the market is now more critical than ever. The commission must ensure that Foodpanda’s expanded market power does not lead to anti-competitive practices, such as imposing stricter terms on restaurants or raising fees for consumers. Historically, the HKCC has taken a proactive stance, as seen in its 2022 investigation, which highlighted the risks of exclusivity clauses and price parity agreements. However, with Deliveroo’s departure, the competitive landscape has shifted dramatically, requiring renewed vigilance.

- Cathy Li