EU Slaps Record Fine on Delivery Hero and Glovo for Labor Market Cartel and Abuse of Minority Stake
Dishing Out Punishment
EU imposes penalties on Delivery Hero for leveraging corporate data unfairly
The EU Commission has handed out a massive €329 million penalties to food delivery giants Delivery Hero and Glovo for engaging in anti-competitive practices. This is the first instance where the Commission has penalized a cartel in the labor market and addressed the use of a minority stake in a competitor for anti-competitive purposes.
Brussels Braves New Territory
The Eastern capital has put its foot down against Delivery Hero and Spanish rival, Glovo, finding them guilty of forming a "labor market cartel." This decision marks a bold new move, as the Commission has never before sanctioned a cartel in the labor market, nor addressed the misuse of a minority stake in a competitor company.
The Backstory
In July 2018, Delivery Hero snagged a non-controlling minority stake in Glovo, progressively increasing their ownership through subsequent investments. By July 2022, Delivery Hero had acquired sole control of Glovo. The cartel agreement included:
- Market Allocation: Companies partitioned the Europen Economic Area (EEA).
- No-Poach Agreement: Delivery Hero and Glovo agreed not to poach each other's employees.
- Information Sharing: Companies shared commercially sensitive information.
The Fine Print
- Total Fines: Delivery Hero was fined €223,285,000, and Glovo received €105,732,000.
- Duration of Infringement: The anti-competitive conduct persisted for about four years.
- Case Significance: This is the first time the Commission has taken action against a labor market cartel and the misuse of a minority stake for anti-competitive purposes.
The Commission's decision underscores that such practices diminish consumer choice, hinder business opportunities, and suppress innovation. Both companies acknowledged their participation in the cartel and settled the case.
The EU Commission's decision to fine Delivery Hero and Glovo signifies a significant move in the finance and business sector, as it marks the first instance of penalizing a labor market cartel and addressing the misuse of a minority stake for anti-competitive purposes in the industry. The fines, amounting to €329 million, were issued for engaging in anti-competitive practices that persisted for around four years, including market allocation, no-poach agreements, and information sharing.
