The European Commission has officially launched an investigation into the activities of Delivery Hero and its Spanish subsidiary, Glovo, over concerns of cartel behavior. The Commission is looking into agreements between the two food delivery companies to determine if there has been any anticompetitive practices.
There are worries that before Delivery Hero acquired Glovo, the companies may have divided up geographic markets and shared sensitive information such as pricing and strategies. Additionally, there are concerns that they may have agreed not to hire each other’s employees, potentially facilitated by Delivery Hero’s minority stake in Glovo.
The investigation comes after surprise inspections were carried out at the companies’ offices in July 2022 and November 2023. Delivery Hero initially held a minority share in Glovo in July 2018, eventually gaining full control in July 2022. This is the first time the Commission is investigating anti-competitive behavior related to a minority shareholding in a competitor.
Both Delivery Hero and Glovo have been contacted for their responses to the investigation. A Glovo spokesperson acknowledged the investigation and emphasized that it does not imply any findings of wrongdoing. The company is committed to cooperating fully with the European Commission. Delivery Hero has also released a similar response statement.
Delivery Hero recently warned investors of a potential antitrust fine of up to €400 million due to the EU antitrust issue. The online food delivery industry has always been highly competitive, with slim profit margins requiring companies to strategically position themselves in the market.
Furthermore, following a surge in food delivery app usage during the pandemic, the sector has been experiencing challenges such as consolidation, market exits, layoffs, and startup closures. This period of correction indicates the intense competition and challenges faced by companies in the food delivery space.
As the investigation unfolds, both Delivery Hero and Glovo will need to navigate the regulatory landscape carefully and ensure compliance with competition laws. The outcome of the investigation could have significant implications for the future operations of these companies and the broader online food delivery industry.
