Breaking Barriers: Delivery Hero and Glovo Hit with €329 Million Finefor Collusive Practices
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Venture into the uncharted waters where the food delivery giants, Delivery Hero and Glovo, found themselves in hot water with the EU Commission for forming an illicit deal – leading to a staggering €329 million fine.
The infringements took place behind the scenes through emails and WhatsApp, leading to Brussels announcing that the companies had engaged in anti-competitive agreements, including price and strategy coordination. Spanish-based Glovo was issued a €106 million fine, while Delivery Hero – the Berlin-based food delivery powerhouse – received a whopping €223 million penalty.
Fostering Fairness
EU Vice-President, Teresa Ribera, emphasized this as a landmark decision, as the Commission had, for the first time, levied fines for employee-related agreements. This move marks a shift towards a fair labor market, ensuring that employers don't collude to curb opportunities for job-seekers.
Although the actual impact on consumers and competitors was left unspecified, it was noted that Delivery Hero had a significant presence in the German market, while Glovo was conspicuously absent.
Through Time and Territories
The process kicked off as far back as November 2023, with unannounced inspections of Delivery Hero headquarters in Berlin and Glovo HQ in Barcelona. Delivery Hero confirmed they had collaborated fully with the Commission throughout the investigation.
The allegations stemmed from the period of July 2018 to July 2022, during which Delivery Hero held a minority stake in Glovo and later gained full control. It is alleged that the agreements were struck before the takeover, and both parties acknowledged being entangled in the cartel.
Expanded Expected Penalties
Last year, Delivery Hero anticipated a fine exceeding €400 million, but they had already reserved €186 million to settle the matter. Fortunately for them (or perhaps not), the actual penalty turned out to be around 20% lower. The reduction in penalty was partly attributed to the Commission recognizing that the intensity of the criticized behavior was relatively weaker during certain periods.
As two of Europe's leading food delivery services, offering an array of products for delivery, Delivery Hero and Glovo's antics have cast a shadow over the competitive landscape in the sector.
Pivotal Implications
The fines imposed on Delivery Hero and Glovo hold multiple implications for European labor markets:
- Reigniting Competition: By punishing companies for no-poach agreements, the EU aims to restore healthy competition, leading to better opportunities for employees [2][3].
- Liberating Talent: The ban on no-poach agreements boosts employee mobility, fostering greater opportunities and wages[3][5].
- Shaping Business Landscape: The action against Delivery Hero and Glovo serves as a warning against the use of minority shareholdings for anticompetitive purposes. This can incentivize a more open and dynamic market environment across Euro [4][5].
- Setting Precedents: This case institutes a regulatory precedent for future enforcement actions concerning similar anticompetitive behaviors, demonstrating the EU's persistence in maintaining a competitive and balanced market [3][5].
Ultimately, the penalty hopes to foster better competition, energize labor market dynamics, and ensure businesses operate according to antitrust regulations, ensuring a progressive and competitive business environment that benefits both employees and consumers.
- In an effort to promote transparency and adherence to the labor regulations, the EU Commission condemned Delivery Hero and Glovo for engaging in employee-related agreements, directing their focus towards fostering a fair labor market.
- To distant the industry from any illicit practices, Delivery Hero's antics have demonstrated the significance of investors not only considering financial aspects but also the ethical implications of their investments in tech firms such as food delivery companies.
- By addressing the collusive practices within the food delivery sector, the fines indicate an expanding expectation that companies adhere to antitrust regulations, not only in their specific industries but also across broader business landscapes like fintech and real-estate.
