Penalty for Cartel Conspiracy: EU Fines Delivery Hero and Glovo €329M
EU Imposes Substantial Fine of €329 Million on Delivery Companies for Violating Cartel Rules - EU levies penalties totaling 329 million euros on supply firms for breaching competition regulations
Here's a lowdown on the recent EU fine imposed on Delivery Hero and Glovo, two major food delivery platforms in Europe.
The Big Squeeze
In 2023, raids were conducted on the offices of Delivery Hero and Glovo, including Delivery Hero's headquarters in Berlin. The EU initiated a cartel investigation in July of the previous year, following suspicions of anticompetitive practices. Delivery Hero, which had already announced its intention to cooperate with the EU Commission, had set aside an impressive €400 million for a potential fine.
Delivery Hero, listed on the Frankfurt Stock Exchange since 2017, began acquiring shares of Glovo in 2018. The takeover was finally completed in 2022. Delivery Hero, a global player present in over 70 countries, and Glovo, based in Spain and active in more than 20 countries, surely shook up the European food delivery market.
The Details
In essence, the EU's concern revolves around a cartel that operated from 2018 to 2022. During this period, Delivery Hero held a minority stake in Glovo, which fostered anticompetitive activities. These included market-sharing agreements, territorial expansion coordination, and a substantial "no-poach" pact to prevent hiring each other's employees.
The companies also engaged in sensitive information sharing, a practice that limited competition in the food delivery sector.
The Hefty Fine
Delivery Hero received a €223 million fine, while Glovo was fined approximately €106 million. The fines were levied because the companies' actions reduced consumer choice, limited opportunities for employees, and discouraged innovation by eliminating competition.
The Significance
This penalty marks a significant milestone as it's the first time the EU has sanctioned a labor market cartel, specifically a no-poach agreement. It directly impacts the labor market by restricting job opportunities for employees. The actions of Delivery Hero and Glovo undermined competition in the European food delivery market, leading to stagnant service quality and pricing.
The EU Commission's Take
The EU's competition chief underlined the gravity of the infringement, stating that such practices keep companies in a "comfort zone" without incentives to improve prices or service quality.
Community law, as enforced by the EU Commission, punishes anticompetitive practices such as market-sharing agreements, territorial expansion coordination, no-poach pacts, and sensitive information sharing in the industry, particularly within the business sector of food delivery. The recent fine imposed on Delivery Hero and Glovo, valued at €329M, demonstrates the significance of competition policy in finance, aiming to maintain a competitive market, encourage innovation, and protect consumer rights in the European community.
