Millions in Fine for Delivery Hero and Glovo: A Game-Changer for Europe's Food Delivery Sector
Delivery Hero faces a seven-figure fine from the criminal cartel.
Get the latest update on ruthless competition! Delivery Hero has been slapped with a hefty €223 million fine by the EU Commission, while Glovo, a rival food delivery service, gets €106 million for engaging in illegal cartels. This historic move is part of the Commission's crackdown on anti-competitive practices, including price-fixing and strategic coordination.
Long-time foes turned partners, both companies have been accused of agreeing not to poach employees and to divide markets between them. These dubious arrangements were reportedly set up via emails and WhatsApp chats. Currently, Glovo is a subsidiary of a German DAX company.
Speaking about this groundbreaking event, EU Commission Vice-President Teresa Ribera declared this as the Commission's first move to block such calculated practices that hamper fair labor markets by limiting employment prospects for individuals.
Unfortunately, the Commission hasn't shared much on the direct consequences on consumers or competitors in Germany yet. However, a Commission official hinted that Delivery Hero was operating in the German market while Glovo kept a low profile.
The investigations have been a drawn-out process. In November 2023, the Commission paid an unannounced visit to Delivery Hero's Berlin office and Glovo's Barcelona headquarters. Delivery Hero acknowledged their cooperation throughout the ordeal.
It all started when Delivery Hero acquired a minority stake in Glovo back in July 2018, and later claimed full control in July 2022. However, these underhanded agreements reportedly took place before the acquisition, and both parties have admitted their involvement in the cartel.
On a brighter note, a significant deal is brewing in the delivery sector with Prosus planning to acquire Just Eat Takeaway.
Last year, Delivery Hero hinted at a potential fine of over €400 million due to the cartel. They had set aside €186 million for the battle. But, thanks to the Commission's acknowledgment of lesser intensity during certain time periods, the fine was reduced.
Delivery Hero and Glovo are leading contenders in Europe's food delivery market, also venturing into the delivery of other products.
What does this mean for the sector, you ask? Here's the tea:
- Reduced Anticipatory Practices: The hefty fines emphasize the EU's resolve to uphold antitrust laws, discouraging such unfair play among other companies[1][2].
- Heightened Transparency and Compliance: Companies will likely tend to stick to antitrust regulations tighter than ever, ensuring that sensitive information is safeguarded, and market allocation agreements are avoided[3][4].
- Better Services and Choices for Consumers: By eliminating cartels, consumers can look forward to fiercer competition, which could lead to improved services, more options, and potentially lower prices[1][2].
- A Gain for Employees: The fines also promote a fairer labor market by nipping no-poach agreements in the bud, allowing employees to seize better opportunities and higher wages across different companies[2].
- Hefty Financial Penalties: The substantial fines serve as a stern financial warning against future anti-competitive behaviors[1][4].
- Internal Revamp: Companies are expected to reassess and revise their business practices to align with EU regulations, leading to potential internal restructuring in governance and operations[3].
Stay tuned for more updates as the food delivery sector transforms under the EU Commission's watchful eye.
[1] European Commission. (n.d.). Competition policy in Europe. Retrieved from https://ec.europa.eu/info/policies/competition/help/antitrust_en[2] OECD. (2019). Anti-competitive practices and agreements. Retrieved from https://www.oecd.org/competition/focus-areas/anti-competitive-practices-and-agreements.htm[3] US Department of Justice. (n.d.). Antitrust resources for businesses. Retrieved from https://www.justice.gov/atr/public-education-business[4] Federal Trade Commission. (n.d.). Antitrust basics. Retrieved from https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-basics
- The hefty fines imposed on Delivery Hero and Glovo could encourage other companies in the industry to adhere to employment policies that promote fair labor markets, preventing no-poach agreements and fostering a more competitive environment for job seekers.
- As a result of the EU Commission's crackdown on anti-competitive practices, businesses may revise their vocational training programs to ensure compliance with antitrust regulations, safeguarding sensitive information and avoiding market allocation agreements.
