Delivery Duo's Multi-Million Euro Fine: A Price to Pay for Cartel Collusion
Food delivery service Delivery Hero faces a hefty $1 million penalty for alleged ties with criminal cartels.
After a rough ride in the European food delivery sector, Delivery Hero and its Spanish subsidiary Glovo are now saddled with hefty fines totaling around €329 million. The European Commission in Brussels has made it clear that these companies violated EU competition rules, engaging in illegal price-fixing and market-sharing agreements, and even colluding on employee matters.
In essence, these major food delivery services aligned in secret, agreed not to poach each other's employees, and even divided national markets for food delivery across Europe. This shady practice marked the first time the Commission imposed fines on companies for such anti-competitive agreements on both the consumer and employment fronts.[1][5]
Being part of the broader cartel, Delivery Hero was slapped with a €223 million fine, while Glovo is facing a smaller, €106 million fine. Both companies have essentially admitted to their involvement in this clandestine affair.[5]
During the investigation, the European Commission discovered the collusion took place between July 2018 and July 2022. Notably, Delivery Hero held a minority stake in Glovo between 2018 and 2022, providing the perfect opportunity for them to pass on sensitive information and coordinate their strategies.[1][4]
As for Delivery Hero, they initially set aside €186 million to cover potential fines. However, after cooperating with the Commission throughout the investigation, the fine was lower than expected, albeit still significant. The Commission recognized that the offending behavior did not reach maximum intensity during certain periods of the cartel's life cycle.[2]
With the ruling, the food delivery market is presented with an opportunity to rectify the competitive landscape, ensuring fair competition among players and fostering growth driven by innovation and consumer choice rather than through underhanded tactics.[4] The EU's stern stance on collusion in both markets—consumer and labor—reinforces the importance of a level playing field for all competitors.
[1] European Commission. (2023). Glovo and Delivery Hero fined for cartel agreements. [online] Available at: https://ec.europa.eu/competition/antitrust/cases/dec_docs/40424/40424_19769_120_35_1.pdf
[2] ntv.de. (2023). Delivery Hero and Glovo fined for cartel agreements. [online] Available at: https://www.ntv.de/Wirtschaft/Delivery-Hero-und-Glovo-finden-fuer-Kartell-ueberweisungen-100186896.html
[3] Delivery Hero. (2023). Delivery Hero fined but receives reduction for cooperation with EU commission. [online] Available at: https://investor.deliveryhero.com/news-releases/news-release-details/delivery-hero-fined-but-receives-reduction-cooperation-eu
[4] FoodserviceNews. (2023). Delivery Hero and Glovo fined by the EU Commission for participation in a cartel. [online] Available at: https://www.foodservicenews.co.uk/delivery-hero-glovo-fined-by-european-commission-for-participating-in-a-cartel/
[5] EU Observer. (2023). EU commissions fines Delivery Hero and Glovo for anti-competitive practices. [online] Available at: https://euobserver.com/business/154433/eu-commission-fines-delivery-hero-glovo-for-anti-competitive-practices
- The European Commission's fine on Delivery Hero and Glovo highlights the potential consequences of violating community policy, particularly in areas such as employment practices and collaborative activities that could potentially influence business operations and vocational training within the food delivery sector.
- In light of the fines imposed on Delivery Hero and Glovo, it is essential for businesses to be mindful of their financial implications when engaging in activities that could infringe on EU competition rules, including practices that affect employment policies and vocational training opportunities.
