Delivery Hero, a Berlin-based food delivery company, has recently warned investors that it may face a significant antitrust fine of up to €400 million. This comes after unannounced raids were conducted by European Union authorities on Delivery Hero and its Spanish subsidiary Glovo in July 2022 and November 2023. While the companies were not named at the time, both confirmed that inspections had taken place. The European Commission expressed concerns about potential violations of competition laws related to forming cartels and other restrictive business practices.
In a note to investors, Delivery Hero stated that the potential sanction could be imposed due to an “alleged anti-competitive agreement to share national markets, exchanges of commercially sensitive information, and no-poach agreements.” This warning follows Delivery Hero’s decision to set aside €186 million in its annual report last year, in anticipation of potential consequences from the inspections. The company explained that the increased provision was based on recent discussions with the European Commission and subsequent analysis. Delivery Hero expressed its intention to fully cooperate with the Commission, as it had during the unannounced inspections.
Delivery Hero had acquired a majority stake in Glovo at the end of 2021, after the Spanish rival had consolidated three of its sub-brands. The food delivery industry has witnessed rapid consolidation as players compete for the top positions in markets, hoping to improve the economic viability of their businesses. However, the thin-margin nature of the food delivery space has proven to be challenging, as evidenced by numerous market exits and business closures following the initial boom during the pandemic.
This warning from Delivery Hero highlights the potential consequences that companies in the food delivery sector may face for breaching competition laws. The European Union is committed to ensuring fair competition and preventing anti-competitive practices in this industry. Delivery Hero’s cooperation with the European Commission demonstrates its commitment to addressing any concerns raised and resolving any potential violations. As the food delivery landscape continues to evolve, it is crucial for companies to navigate the complex regulatory environment to ensure sustainable growth and success.
