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Delivery Hero Faces Million-Dollar Penalty from Crime Syndicate

Unlawful Contracts or Unauthorized Deals

Delivery service providers Delivery Hero and Glovo face penalties exceeding 300 million euros due...
Delivery service providers Delivery Hero and Glovo face penalties exceeding 300 million euros due to alleged cartel activities.

Delivery Giants Bite the Dust for Price-Fixing Scandal

Delivery Hero Faces Million-Dollar Penalty from Crime Syndicate

A gruesome bill is on the horizon for Delivery Hero and Glovo, two bigwig food delivery companies, as they've been slapped with hefty fines totaling a whopping 329 million euros. The European Union's (EU) antitrust's department in Brussels has flagged these companies for anti-competitive agreements, such as colluding on pricing and strategizing together. Glovo, a Spanish-based food delivery service, is facing a fine of 106 million euros, while Delivery Hero, a German-based competitor, is looking at a fine of around 223 million euros.

Interestingly, these seemingly shady dealings took place via emails and WhatsApp according to the EU authorities. The collusion involved a non-poaching agreement and dividing the food delivery markets among themselves.

Teresa Ribera, Vice President of the EU Commission, sent shockwaves through the industry when she declared that this was the first ever fine handed out by the Commission for such employee agreements. She emphasized the importance of a transparent labor market, free from employers colluding to restrict opportunities.

The Commission didn't comment specifically on the impact on consumers or competitors in Germany, but a Commission official noted that Delivery Hero was active in the German market, while Glovo was not.

The investigation into these allegations has been ongoing since November 2023, with the Commission conducting unannounced inspections at Delivery Hero's Berlin office and Glovo's Barcelona headquarters. Delivery Hero confirmed that they cooperated fully with the Commission throughout the investigation.

Delivery Hero had a minority stake in Glovo from July 2018 and gained full control in July 2022. The EU Commission confirmed that the agreements took place before the takeover, and both companies have not disputed their involvement in the cartel.

This isn't the first brush with trouble for Delivery Hero. In 2021, they announced the possibility of a fine exceeding 400 million euros due to the cartel. However, the fine turned out to be lower than expected, as the Commission recognized lesser intensity of the criticized behavior during certain time periods.

These two companies, Delivery Hero and Glovo, are among the biggest food delivery services in Europe, offering more than just food.

[1] ntv.de[2] jwu/dpa

  • Anti-Competitive Agreements
  • Fine
  • Employee Poaching
  • EU Commission
  • Market Division

Did you know?

  • This case involves Delivery Hero using its minority stake in Glovo to gain access to sensitive information, which facilitated anti-competitive coordination and limited market competition.
  • Delivery Hero and Glovo agreed not to poach each other's employees and divided national markets for food delivery services.
  • The EU has shown its commitment to preventing anti-competitive behavior across various industries, including food delivery, by actively monitoring and penalizing such practices. However, such high-profile fines are not frequent within this sector.

The EU Commission, in an unprecedented move, imposed a fine of 329 million euros on Delivery Hero and Glovo for their involvement in anti-competitive agreements, such as colluding on employment practices like poaching and dividing food delivery markets. The Commission is stressing the importance of a transparent business environment, free from employer collusion that restricts opportunities in the vocational training and employment sectors.

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