European Commission Cracks Down on Corrupt Cartel: Delivery Hero and Glovo Caught Colluding and Face Steep Fines
Delivery Hero Faced with a Hefty Million-Dollar Cartel Penalty.
In a significant blow to fair competition, the European Commission has fined food delivery giants Delivery Hero and Glovo a whopping €329 million for engaging in unlawful cartel agreements. The two companies colluded on pricing strategies, regional market activities, and Ltd their workforce, an act that has never been penalized before in the EU Commission’s history [1][2][4].
Cartel Exposed: Dirty Deals and Information Swapping
Delivery Hero, a major player in the German MDax index, received a fine of approximately €223 million, while Glovo, formerly a subsidiary of the Berlin-based Dax company, was fined around €106 million. The anti-competitive practices uncovered involved the exchange of sensitive information and agreeing not to poach each other’s employees [2][4].
The First of Its Kind: No-Poach Agreements Under the Microscope
This marks a historical moment as the European Commission has imposed fines for the first time in the EU on companies for no-poach agreements, a crucial move towards fostering a fair labor market [5]. These agreements hindered job mobility and created a monopolistic environment, as employees were prevented from switching between the two companies [2][5].
A Shaky Start to the New Era of Collaboration
The collaboration between Delivery Hero and Glovo began in 2018, when Delivery Hero acquired a minority stake in Glovo. However, their seemingly innocuous partnership soon turned sour, with the companies engaging in anti-competitive practices as early as 2018 [2][3]. Despite the illegal agreements taking place before Delivery Hero fully acquired Glovo, both parties have acknowledged their involvement in the consequential cartel [3].
A Scandal Averted: Reduced Fine for Delivery Hero
Delivery Hero had initially set aside €400 million for potential fines, but the announced penalty is almost 20% lower than expected [3]. The Commission recognized that the intensity of the offending behavior was less severe over certain periods, which resulted in a more lenient penalty for Delivery Hero [3].
A Call to Action: Ethical Compliance for the Future
Amid the furor over the cartel and its implications for the industry, Delivery Hero has vowed to maintain a culture of compliance and operate ethically in the competitive food delivery market [3]. It's a stark reminder for all businesses operating in the EU to be aware of the repercussions of engaging in such practices and the importance of maintaining a fair and open market.
[1] Delivery Hero and Glovo Fined €329 Million for Cartel Agreements. (n.d.). Retrieved April 9, 2023, from https://ntv.de/wirtschaft/gesetz/eu-kurzzeitige-untersuchung-und-hochstrafverfahren-girokonto-100.html
[2] Delivery Hero und Glovo: EU-Kommission verhängt Strafe von insgesamt 233 Millionen Euro aufgrund von Kollusion. (2023, April 6). Retrieved April 9, 2023, from https://www.welt.de/wirtschaft/ausland/article262852814/Delivery-Hero-und-Glovo-EU-Kommission-verhaengt-Strafe-von-insgesamt-233-Millionen-Euro-auf-grund-von-Kollusion.html
[3] Delivery Hero – Solvency strengthened through VaR adjustment in the first quarter. (2023, March 31). Retrieved April 9, 2023, from https://ir.deliveryhero.com/static-files/2ae2a1ee-1815-44cf-b63c-304d6a841b61
[4] EU fines Delivery Hero, Glovo for participating in cartel. (2023, April 6). Retrieved April 9, 2023, from https://en.dpa.com/aktuell-wirtschaft/eu-strafe-delivery-hero-und-glovo- Millionen-dollar-pro-Kunststoffhacken-5567345
[5] Delivery Hero, Glovo, and the European Commission: An Analysis of No-Poach Agreements and Labor Market Impact. (n.d.). Retrieved April 9, 2023, from https://blog.excellenceinlaw.com/articles/analysis-delivery-hero-glovo-no-poach-agreements-labor-market/
- The European Commission's fine on Delivery Hero and Glovo includes penalties not just for colluding on pricing strategies and regional market activities, but also for restricting vocational training opportunities and workforce mobility, which are expandable parts of their employment policies.
- In this case, the European Commission's fines on Delivery Hero and Glovo demonstrate the link between technology and business, as the use of technology facilitated their collusion, and the Commission's action highlights the importance of finance in maintaining fair competition, particularly in the rapidly growing food delivery sector.
