The European Commission initiated an official inquiry into the operations of Delivery Hero, headquartered in Berlin, and its Spanish branch, Glovo, on Tuesday. The investigation is rooted in concerns over cartel formations, aiming to delve deeply into the dealings between these online food delivery platforms to unearth any potential violations of competition laws.
Expressing its apprehensions, the Commission mentioned, “Before their consolidation, Delivery Hero and Glovo could have divided geographic territories and exchanged sensitive business information (for instance, regarding pricing strategies, operational capacities, costs, and product details).” It raised alarms that such collusion might extend to agreements on refraining from hiring competitors’ staff. “These potentially anticompetitive actions could have been made easier by Delivery Hero holding a minor stake in Glovo,” a statement from the Commission’s press release noted.
This announcement came in the wake of surprise inspections at the companies’ local offices in July 2022 and November 2023.
Since July 2018, Delivery Hero had a minority investment in Glovo, eventually gaining full ownership in July 2022. The Commission has pointed out that this marks its first probe into potentially anticompetitive arrangements facilitated by a company’s minority investment in a rival firm.
Both Delivery Hero and Glovo have been approached for comments on these allegations.
A representative from Glovo acknowledged the ongoing scrutiny by the Commission, clarifying, “Being under investigation doesn’t imply the Commission has made any definitive judgments regarding breaches of antitrust rules, nor does it influence the eventual outcome. Glovo is prepared to cooperate extensively with the European Commission and adhere to all regulatory mandates and compliance standards.”
Delivery Hero has echoed a similar sentiment in its own public statement, accessible here.
In a recent communication, the Berlin-based delivery behemoth cautioned its shareholders about a potential fine reaching up to €400 million, stemming from these antitrust concerns.
The battleground of online food delivery is notoriously aggressive, characterized by razor-thin profit margins. Success in this sector demands smart strategic maneuvers to either become a market leader or a close second, crucial for sustaining a profitable model. Moreover, the industry has faced considerable challenges post the 2020-2021 pandemic boom, with market corrections leading to consolidations, market exits, workforce reductions, and even business closures.
This article has been updated to include Delivery Hero’s official statement.
Compiled by Techarena.au.
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