Delivery Hero and Glovo Fined for Anti-Competitive Practices: What It Means for You
Delivery Hero Faces Multimillion-Dollar Penalty Imposed by Criminal Cartel
In a major move, the EU Commission has imposed a combined fine of €329 million on Delivery Hero and its Spanish subsidiary, Glovo, for their involvement in an illegal cartel. Here's what you need to know about this jaw-dropping decision.
The Lowdown
Both Delivery Hero and Glovo, popular food delivery services, have been accused of exchanging sensitive information, coordinating their activities regionally, and even refraining from poaching each other's employees. These anti-competitive agreements, allegedly conducted via email and WhatsApp, were cited as the reason for the hefty fines.
The Penalties
Delivery Hero has been slapped with a hefty €223 million fine, while Glovo, a Spanish company, has to cough up €106 million. Given that Delivery Hero was expecting a higher penalty, it's safe to say they're partly relieved.
The News That's Not So Good
The EU Commission didn't comment on the impact of these practices on consumers or competitors in Germany, but an official did note that Delivery Hero was active in the German market while Glovo was not.
The Investigation
The investigation into these companies was ongoing, with unannounced inspections conducted in Berlin and Barcelona back in November 2023. Delivery Hero claims to have cooperated fully with the Commission throughout the investigation.
The Background
Delivery Hero held a minority stake in Glovo from July 2018 but took full control in July 2022. However, the Commission states that the collusion took place before the takeover, and both companies have acknowledged their involvement in the cartel.
The Previous Warnings
Last year, Delivery Hero announced the possibility of a fine of over €400 million due to the cartel. However, the final fine was lower than expected, as the Commission recognized that the criticized behavior was of lesser intensity over certain periods.
The Implications
The EU's decision to fine these companies highlights several key implications:
- Reduced Competition: The cartel's activities, which included exchanging sensitive information and dividing markets, reduced competition, limiting choices for consumers and business partners. This environment discourages innovation and potential market entries by new competitors.
- Consumer Impact: By limiting competition, the cartel likely kept prices higher than they would be in a more competitive market, affecting consumer welfare negatively.
- No-Poach Agreements: The EU's action against Delivery Hero and Glovo marks the first time the Commission has sanctioned "no-poach" agreements in the labor market. This sends a strong signal that such practices will not be tolerated, potentially leading to increased labor mobility and better working conditions.
- Fair Labor Practices: The fine emphasizes the importance of fair labor practices, ensuring that workers are not unfairly restricted from seeking better opportunities with competitors.
- Ethical Business Models: The fine underscores the importance of ethical business practices and compliance with antitrust laws. Companies must ensure that their strategies do not involve anti-competitive behavior, such as sharing sensitive information or dividing markets.
- Regulatory Oversight: The EU's strong stance on anti-competitive practices enhances regulatory oversight, encouraging companies to operate responsibly and compete fairly.
- Deterrent Effect: The significant fine is likely to deter other companies from engaging in similar anti-competitive practices, given the financial consequences and reputational damage.
- Monitoring and Enforcement: The EU's commitment to closely monitor consumer-facing industries signals an increased focus on identifying and addressing anti-competitive behaviors, which could lead to more stringent enforcement in other sectors.
Sources: ntv.de, jwu/dpa
- Delivery Hero
- EU Commission
- Cartel Law
- Fine
- MDax Company
Community policy should emphasize ethical business practices, prohibiting cartels and anti-competitive behaviors among Delivery Hero subsidiaries. Vocational training programs could be incorporated into employment policy to invest in a diverse pool of qualified professionals, ensuring fair labor practices within the company. The finance department must account for the €223 million fine imposed by the EU Commission, as it may impact the overall business operations.
