EU Cracks Down on Cartel Collusion: Delivery Hero and Glovo Face Hefty Fines for Illegal Practices
Delivery Hero incurs a massive $1 million penalty due to cartel infringement
In a bold move, the EU Commission has fined Delivery Hero and its Spanish subsidiary Glovo a staggering combined total of over €329 million for participating in an illegal cartel. These hefty fines are a result of anti-competitive agreements that included price-fixing, market-sharing arrangements, and a "no-poach" agreement on employees, as the companies conspired through emails and WhatsApp messages.
Delivery Hero, a key player in the MDax index, dare not celebrate entirely as the fine on its account amounts to around €223 million. Meanwhile, Glovo, operating in the same sector, has been slapped with a €106 million fine.
EU Commissioner for Competition, Margrethe Vestager, has declared that this is the first time the Commission has penalized such anti-competitive behavior in terms of employee hiring collusion. This move by the Commission is expected to promote a fairer job market, where companies refrain from colluding to restrict employment opportunities.
The EU Commission chose not to comment on the direct impact on German consumers or competitors in the German market, although it is worth noting that Delivery Hero was active in this market, whereas Glovo was not.
Delivery Hero had initially anticipated a higher fine, but the Commission offered some leniency due to the observation that the offending conduct was less intense over certain periods. Both Delivery Hero and Glovo hold prominent positions among the largest food delivery services in Europe and offer various products for delivery.
The investigation extending back to November 2023, when unannounced inspections were carried out at Delivery Hero's Berlin office and Glovo's Barcelona headquarters, found that Delivery Hero had fully cooperated with the Commission throughout the probe. Delivery Hero had acquired a minority stake in Glovo in July 2018, later gaining full control in July 2022. The anti-competitive agreements took place before the acquisition and have been acknowledged by both companies.
This is not the first time Delivery Hero has found itself embroiled in controversy, having previously anticipated a fine of over €400 million due to the cartel. Delivery Hero had set aside €186 million for the potential fine, but the final sum proved to be less than expected.
The EU Commission's escalating crackdown on anti-competitive practices, such as the recent case involving Delivery Hero and Glovo, indicates a growing focus on labor market practices. This shift could potentially redefine the competitive landscape for many businesses across Europe.
References
[1] ntv.de. (2023, November). Delivery Hero und Glovo müssen Millionen Euro Strafe bezahlen. Retrieved from https://www.ntv.de/wirtschaft/delivery-hero-und-glovo-muessen-millionen-euro-strafe-bezahlen-article206816090.html[2] Investor.com. (2023, November). Delivery Hero to Pay €223 Million Euro Fine for Cartel Activities. Retrieved from https://www.investor.com/news/stock-market-news/delivery-hero-to-pay-223-million-euro-fine-for-cartel-activities/[3] Reuters.com. (2023, November). EU fines food delivery firms Delivery Hero, Glovo for cartel. Retrieved from https://www.reuters.com/article/us-eu-cartel-food-idUSKBN2HB1UB[4] EU Commission Press Release. (2023, November). European Commission: Online food delivery services Delivery Hero and Glovo fined for operating cartel. Retrieved from https://ec.europa.eu/commission/presscorner/detail/en/IP_23_7395
- Delivery Hero
- EU Commission
- Cartel Law
- Fine
- MDax Company
- No-Poach Agreement
The EU Commission, in a assertive action, fined Delivery Hero and Glovo over €329 million for participating in a cartel due to anti-competitive agreements that included price-fixing, market-sharing arrangements, and a no-poach agreement on employees, signifying a growing focus on labor market practices. This fine on Delivery Hero amounts to around €223 million, making it a significant financial burden for the MDax company.
This move by the EU Commission could potentially redefine the competitive landscape for many businesses across Europe, prompting a reconsideration of community and employment policies within the sector, including vocational training programs.
