EU Slaps €329 Million Fine on Delivery Hero and Glovo for Cartel Violations
- Give me a break!*
Infringement of Competition Law: European Union Imposes €329 Million Penalty on Courier Services - Supply companies in the EU face a fine of EUR 329 million for violating competition law regulations.
In the heart of Europe, two giants of the food delivery scene, Delivery Hero and Glovo, are reportedly under the spotlight. Recent raids on their offices, including Delivery Hero's HQ in Berlin, have stirred quite the buzz. This whole shebang started back in 2022 when the EU kicked off a cartel investigation.
When the dust settled, Delivery Hero, ever the good sport (or so they claim), asserted that they'd play ball with the EU Commission and set aside a whopping €400 million for potential penalties.
Delivery Hero, a constant on the Frankfurt Stock Exchange since 2017, and Glovo, a Spanish company with its headquarters in the land of Paella, have been merging their fortunes since 2018. The romance culminated in a full-blown takeover in 2022.
According to their own boasts, Delivery Hero is active in 70+ countries worldwide, while Glovo reigns supreme in more than 20 countries.
Europe, EU, EU Commission
Delivery Hero and Glovo: A Tangled Web
Detailed investigations by the EU Commission have uncovered a tangled web of anticompetitive practices between these two entities. Here's the lowdown:
Investigation History
- Main Players: This sordid tale involves Delivery Hero, the German online food delivery juggernaut, and Glovo, the Spanish conqueror. Delivery Hero bought a piece of Glovo back in 2018, which turned into a full-blown merger in 2022 [3][4].
- Timeline: The alleged anticompetitive shenanigans took place between 2018 and 2022, with Delivery Hero holding a minority stake in Glovo [5].
Key Investigation Findings
- Employee Poaching Ban: Delivery Hero and Glovo were caught red-handed in agreements to avoid recruiting each other's employees, thereby limiting job opportunities, mobility, and competition in the labor market. This represents the EU's first enforcement of competition rules in the labor market [2][3].
- Confidential Information Sharing: The two companies were busted for swapping sensitive information under the table, which aided them in synchronizing their market strategies and stifling competition [4][5].
- Market Segmentation: Accusations of market-sharing practices further intensified the competition squeeze in the food delivery sector [5].
The Gram-Scolds
- Total Fine: The final fine tally comes to a steep €329 million, with Delivery Hero taking a €223 million hit and Glovo bearing a €106 million penalty [4].
- Legal Precedent: This case serves as a monumental legal precedent for future cases involving similar anticompetitive tricks in the EU [3].
Lessons Learned
- Competition Law Compliance: This incident underscores the importance for companies holding minority stakes in competitors to toe the EU competition law line, especially concerning confidential information sharing and labor market agreements [5].
- Setting the Bar: It establishes a formidable legal precedent for future cases involving such anticompetitive practices in the EU [3].
- In the wake of a €329 million fine imposed by the EU Commission, Delivery Hero and Glovo, two dominant players in the food delivery industry, are warned to be more vigilant in adhering to competition policy, particularly in matters pertaining to employee poaching, confidential information sharing, and market segmentation, to avoid repercussions in the future.
- The strict penalty levied on Delivery Hero (€223 million) and Glovo (€106 million) serves as a powerful reminder for businesses operating in the EU to strictly comply with competition laws, especially those involving finance and business transactions, to maintain a fair and competitive market landscape.
