European Commission's Harsh Sanction: A €329 Million Fine Against Delivery Hero and Glovo
Unlawful drug syndicate fined $223 million after delivery service involvement
In a landmark decision, the European Commission has slapped a hefty €329 million fine on Delivery Hero and its Spanish subsidiary, Glovo, for participating in a shady cartel within the online food delivery sector. This tough action highlights crucial anti-competitive practices with far-reaching ramifications for consumers and businesses within the European Union.
Major Players and Underhanded Maneuvers
- Key Companies Implicated: Delivery Hero, a German dominator in the food delivery realm, and its Spanish counterpart, Glovo, are prominent forces in the European food delivery market. They cater not only to meal deliveries from restaurants but also grocery shopping and various other non-food products via their apps and websites.
- Dirty Deeds: The cartel was marred by several underhanded practices:
- Swapping Confidential Data: Delivery Hero and Glovo traded commercially sensitive data, enabling them to coordinate their market strategies and suppress competition.
- No-Poach Pacts: The companies conspired to keep their hands off each other's employees, weakening labor market dynamics and stifling opportunities for workers.
- Territory Arrangements: They carved up national markets among themselves, further constricting competition and innovation in the sector.
Investigative Timeline and Resolution
- Probing Phase: The Commission's probe primarily focused on the period ranging from 2018 to 2022, during which Delivery Hero owned a minority stake in Glovo (before upping its ownership to 94% in July 2022).
- Raids and Formal Inquiry: The Commission raided both companies in 2022 and 2023 and kicked off its formal investigation in 2024.
- Fines and Settlement: The companies were hit with a combined fine of €329 million, with Delivery Hero dishing out approximately €223 million and Glovo forking out around €106 million. Both parties admitted their involvement and opted to settle the matter.
Consequences of the Ruling
- Competition Law Implications: This case serves as a powerful reminder of the significance of adhering to EU competition laws, even for companies with minority stakes in competitors. It emphasizes the potential for such stakes to be misused for anticompetitive purposes.
- Impact on Consumers and Labor Market: The cartel's maneuvers curbed consumer choice and labor market opportunities, stressing the necessity of vigilant competition enforcement in daily life.
- Precedent-Setting Decision: This is the first time the Commission has penalized companies for a no-poach agreement, which bars the hiring of each other's employees. This decision sets an important precedent for potential future cases.
In the European Union, the fine of €329 million imposed on Delivery Hero and Glovo by the European Commission underscores the severity of anticompetitive practices in the finance and business sector, particularly within the online food delivery industry. The fines were levied due to their involvement in a cartel, which included swapping confidential data, no-poach pacts, and territory arrangements that suppressed competition and innovation.
