Delivery Hero Faces Hefty Million-Dollar Penalty from Criminal Cartel

Caught Colluding: Delivery Hero and Glovo Facing Millions in EU Fines for Illegal Cartel Activities

Delivery Hero Faces Hefty Million-Dollar Penalty from Criminal Cartel

In a landmark decision, the EU Commission has fined Delivery Hero and its subsidiary Glovo a whopping €329 million for engaging in an illegal cartel. Delivery Hero, a member of MDax, faces a hefty €223 million fine, while Glovo must pay €106 million.

The food delivery giants were found guilty of anti-competitive practices, such as manipulating prices and strategies, coordinating regional activities, and conspiring to keep employee poaching at bay. These agreements took place via low-key channels like emails and WhatsApp messages, according to the EU Commission.

European Commission Vice President Teresa Ribera pointed out that this was the first time the Commission had imposed fines for such cartel activities regarding employee recruitment. Ribera upheld the importance of a fair labor market, free from employer collusion impeding opportunities.

Though the Commission did not delve into the specific ramifications for consumers or competitors in Germany, it was noted that Delivery Hero held a significant presence in the German market, whereas Glovo did not.

The investigation, which has been ongoing, saw unannounced inspections at Delivery Hero's Berlin headquarters and Glovo's Barcelona offices in November 2023. Delivery Hero, in compliance with the Commission, cooperated fully during the entire investigation.

Previously, Delivery Hero acquired a minority stake in Glovo in July 2018, subsequently gaining full control in July 2022. The anti-competitive agreements took place before the acquisition and were acknowledged by both companies in conjunction with their involvement in the cartel.

In a somewhat happier note for Delivery Hero, the company revealed lower-than-expected fines due to the Commission acknowledging that the offending behavior was, at times, of lesser intensity.

Additional Insights:

• The fines were reduced by 10% due to both companies' cooperation with the EU's investigation.
• The EU Commission investigation focused on competition concerns related to employee recruitment, market division, and information exchange between Delivery Hero and Glovo.
• Both companies' anti-competitive activities restricted the quality and range of food delivery services in the European Economic Area, leading to reduced consumer choice and competition.
• In acknowledging their involvement in the cartel, Delivery Hero and Glovo agreed to settle the case, which included waiving certain procedural rights in exchange for reduced fines.
• Delivery Hero
• Glovo
• EU Commission
• Cartel Law
• Fine
• MDax Company
• Employee Poaching
• Market Division
• Information Exchange
• Cartel Activities

1. The EU Commission, in order to uphold a fair labor market and shield opportunities, has implemented a community policy that adamantly opposes anyForms of collusion among employers, such as those caught in the alleged cartel activities by Delivery Hero and Glovo.
2. In light of the EU's fines for illegal cartel activities, Delivery Hero and Glovo, in their employment policies, must cope with stricter regulations to prevent anti-competitive practices, including employee poaching, market division, and information exchange. To further this endeavor, either company might consider offering vocational training programs, thereby enhancing the skill sets of their workforce and reducing instances of unethical business practices.

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