European Commission Investigates Delivery Hero and Glovo for Potential Cartel Behavior
The European Commission has launched an investigation into Delivery Hero and Glovo due to concerns about possible anti-competitive behavior. The commission is particularly worried about the alleged sharing of sensitive business information and strategies, as well as potential agreements to refrain from poaching each other's employees. This development has raised significant eyebrows in the industry.
The origins of this investigation can be traced back to surprise office visits conducted in 2022 and 2023. Of particular interest to the commission is Delivery Hero's gradual acquisition of Glovo, starting with a minority stake in 2018 and culminating in full control in 2022. This is a unique case for the commission, as it marks the first time it is delving into a scenario where one company had a significant stake in another before taking complete control.
Both Delivery Hero and Glovo have publicly expressed their commitment to cooperating with the investigation. However, the stakes are high for Delivery Hero, as they recently informed their investors of the possibility of facing fines of up to €400 million if the investigation does not result in their favor.
The landscape of the food delivery industry has become fiercely competitive, especially following the surge in demand during the pandemic. This has led to various companies engaging in mergers, layoffs, and even closures. The ongoing investigation adds an extra layer of dynamism and uncertainty to this rapidly evolving sector.
Key Takeaways
- European Commission investigates Delivery Hero and Glovo for potential cartel behavior.
- Concerns include geographic market allocation and sharing of sensitive information.
- Investigation follows office raids in 2022 and 2023.
- Delivery Hero held a minority share in Glovo before acquiring full control.
- Both companies pledge full cooperation with the investigation.### Analysis
The European Commission's probe into Delivery Hero and Glovo's alleged cartel behavior could lead to fines up to €400 million for Delivery Hero. This investigation, sparked by market dominance concerns, affects investors and competitors. Short-term impacts include regulatory scrutiny and potential financial penalties, while long-term consequences may reshape industry norms and competition dynamics. The case underscores the evolving regulatory landscape in tech-driven markets post-pandemic.
Did You Know?
- Cartel Behavior:
- A cartel involves agreements between competing entities on aspects such as price fixing, total industry output, market sharing, and allocation of customers, regions, or territories. In this instance, the European Commission is investigating whether Delivery Hero and Glovo engaged in cartel behavior, potentially including agreements on pricing strategies, market allocation, and non-competition in hiring employees.
- Geographic Market Allocation:
- Geographic market allocation refers to the division of specific geographical areas among competing businesses to avoid direct competition, potentially resulting in reduced competition and higher consumer prices. The investigation into Delivery Hero and Glovo includes concerns about whether they allocated specific regions to each other to avoid competition, which is a common practice in cartel behavior.
- Office Raids:
- Office raids, in the context of antitrust investigations, involve authorities physically visiting and searching the premises of suspected companies to gather crucial evidence such as documents and electronic data. The surprise visits to Delivery Hero and Glovo's offices in 2022 and 2023 are a vital part of the European Commission's efforts to collect evidence related to their cartel investigation.