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Revamped Rant:
Delivery Hero and Glovo Fined €329 Million: A Toxic Tango in the Tech World
Here's the lowdown: The EU's competition watchdog, the European Commission, has slammed German food delivery giant Delivery Hero and its Spanish subsidiary Glovo with a whopping €329 million fine, can you believe it? Why, you ask? Well, they got caught red-handed violating antitrust laws, moving together like a well-choreographed dance to limit competition and stifle innovation.
From 2018 to 2022, Delivery Hero used its stake in Glovo to keep rivals at bay by exchanging sensitive company info, avoiding poaching each other's employees, and dividing up national markets for food delivery. That's right, folks, they were dividing and conquering, reducing choices for consumers and opportunities for employees. Talk about a toxic tango!
Now, here's the kicker: Even though Delivery Hero sneakily took sole control of Glovo in July 2022, the EU's formal probe focused on the period before this power move. The European Commission has stated that this case is crucial because Delivery Hero used its minority stake in a sneaky way to facilitate an anti-competitive strategy.
Delivery Hero's share of the fine will amount to €223 million, while Glovo has to cough up around €106 million. Both companies have admitted their involvement in this lousy scheme and agreed to pay the fines to settle the case.
The Commission stated that "Cartels like this reduce choice for consumers and business partners, reduce opportunities for employees, and reduce incentives to compete and innovate." Sounds like they're onto something, eh?
But it gets worse: These unscrupulous practices went beyond simple emails. They involved WhatsApp chats, too, where officials discussed market entries, and agreed not to enter countries where one company was already present or to decide which company would enter unexplored markets.
By July 2020, these two companies had completely stopped competing with each other, carefully avoiding the same markets to reduce consumer choice and, ultimately, contribute to higher prices.
Delivery Hero has confirmed that it has reached a settlement agreement with the Commission regarding the antitrust probe, stating that it had already set aside a provision for the fine.
"Today's settlement allows Delivery Hero to address the European Commission's concerns while allowing stakeholders to move on swiftly," the company added in a statement.
Delivery Hero offers services in over 70 countries worldwide, including 16 member states of the European Economic Area (EEA). Glovo, now a Delivery Hero subsidiary, is present in more than 20 countries worldwide, including eight EEA member states.
The EU's decision is the first where the commission finds a cartel in the labor market, and it serves as a warning to companies that try to limit competition for talent and opportunities for workers.
The Real Damage
The no-poach and market division agreement between Delivery Hero and Glovo had significant impacts on the food delivery industry in Europe, leading to several key consequences:
- Reduction in Competition: By agreeing not to poach each other's staff, Delivery Hero and Glovo reduced competition for talent, potentially hindering innovation and career growth for employees[3][5].
- Market Division: The agreement allowed the companies to divide national markets, removing competition on a geographic level. This division could lead to higher prices and reduced service quality for consumers[5].
- Antitrust Violations: The agreement was deemed illegal under EU antitrust laws, specifically violating Article 101 of the TFEU and Article 53 of the EEA Agreement[1][4][5].
- Industry Response: The EU's actions demonstrate the commitment to maintaining competitive markets, which may encourage other companies to avoid similar agreements, creating a more competitive environment beneficial to consumers and workers[3][5].
- Impact on Profit Margins: The food delivery industry, already struggling with thin profit margins post-pandemic, may have benefited from this collusion, allowing the companies to maintain or improve profit margins at the cost of legality, consumer choice, and competition[3][5].
Final Take
The no-poach and market division agreement between Delivery Hero and Glovo had far-reaching consequences for the European food delivery industry, including reduced competition, potential harm to consumers, and legal repercussions. The EU's actions aim to ensure that companies operate within the law, promoting healthy competition that benefits consumers and the market as a whole.
- The fine imposed on Delivery Hero and Glovo for their antitrust violations serves as a significant event in the finance industry, highlighting the European Commission's commitment to upholding competition laws in the business sector.
- The agreement between Delivery Hero and Glovo in the food delivery industry, which involved a no-poach clause and market division, had far-reaching effects, impacting news related to finance, business, and the industry's overall competitiveness.
