In a bold move to safeguard competition in the burgeoning online food delivery market, the European Commission has launched a formal antitrust investigation into two of Europe’s largest food delivery companies, Delivery Hero and Glovo. This investigation could have significant implications for consumers and workers across the European Economic Area (EEA).
What’s happening?
The European Commission is scrutinizing whether Delivery Hero and Glovo have engaged in cartel-like behavior, which includes potentially dividing up geographic markets and sharing sensitive commercial information such as pricing strategies and operational capacities. Additionally, there are concerns that the two companies may have agreed not to poach each other’s employees, a practice that could stifle job opportunities and wage growth for workers in the sector.
The Companies in Question
Delivery Hero: Headquartered in Germany, this company operates in over 70 countries and partners with more than 500,000 restaurants. It is listed on the Frankfurt Stock Exchange.
Glovo: Based in Spain, Glovo is active in more than 1,300 cities across 25 countries. In July 2022, Delivery Hero acquired a majority stake in Glovo, making it a subsidiary.
Why It Matters
The online food delivery market is rapidly growing, and ensuring fair competition is crucial for maintaining reasonable prices and diverse choices for consumers. Margrethe Vestager, the European Commission’s Executive Vice-President in charge of competition policy, emphasized the importance of this investigation:
“Online food delivery is a fast-growing sector, where we must protect competition. This is why we are investigating whether Delivery Hero and Glovo agreed to share markets and not to poach each other’s employees. If confirmed, such conduct may amount to a breach of EU competition rules, with potential negative effects on prices and choice for consumers and on opportunities for workers.”
Background and Next Steps
The Commission’s concerns stem from Delivery Hero’s minority shareholding in Glovo from July 2018 until its full acquisition in July 2022. During this period, the companies might have engaged in practices that violate EU competition rules, specifically Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement.
The investigation follows unannounced inspections at the companies’ premises in June 2022 and November 2023. These inspections were part of a broader inquiry into potential collusion in the food delivery sector.
Implications for the Market
This investigation is particularly significant as it marks the Commission’s first formal probe into no-poach agreements and anticompetitive practices involving minority shareholdings. If the allegations are proven, it could lead to substantial changes in how companies operate within the online food delivery market, ensuring a more competitive environment that benefits both consumers and workers.
What’s Next?
The Commission will conduct an in-depth investigation, which will be prioritized but has no set deadline. The duration will depend on various factors, including the complexity of the case and the level of cooperation from the companies involved.
For those interested in the nitty-gritty details of the Commission’s actions against cartels and how to report suspicious behavior, more information is available on the Commission’s dedicated cartels website. Updates on this investigation will be posted on the Commission’s competition website under case number AT.40795.
As this investigation unfolds, it will be crucial to monitor its impact on the online food delivery market and the broader implications for competition policy in Europe. This case could set a precedent for how similar issues are handled in the future, ensuring a fair and competitive market for all.
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