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Delivery Hero Faces Potential €400 Million Antitrust Fine
Berlin-based food delivery behemoth Delivery Hero has cautioned its investors about a looming antitrust fine that could reach as much as €400 million. This latest development stems from unannounced raids conducted by European Union authorities on the offices of Delivery Hero and its Spanish subsidiary, Glovo, earlier this year.
Initially, the EU did not disclose the names of the companies involved, but both Delivery Hero and Glovo confirmed that they were indeed subjected to these inspections. The European Commission has expressed concerns about possible violations of competition laws, particularly regarding cartel formation and other restrictive business practices.
Allegations of Anti-Competitive Practices
In a statement released on Sunday evening, Delivery Hero mentioned that the fine could be related to "alleged anti-competitive agreement to share national markets, exchanges of commercially sensitive information, and no-poach agreements." The company had already set aside €186 million in its previous annual report following the initial EU raids. However, recent informal engagements with the European Commission and subsequent detailed analyses have prompted Delivery Hero to consider increasing this provision.
"Delivery Hero intends to fully cooperate with the European Commission as it did during the unannounced inspections in July 2022 and November 2023," the company stated, emphasizing its commitment to compliance.
Market Consolidation and Competitive Struggles
The German company took a majority stake in Glovo at a critical juncture, about six months after the Spanish company made significant financial moves in the market. This acquisition is part of a broader trend of rapid consolidation in the food delivery industry, where firms vie for leading positions to make their business models sustainable.
The post-pandemic period has been particularly challenging for the sector. Many competitors have exited the market, and the once booming demand for food delivery has markedly declined. This scenario highlights the razor-thin margins and competitive pressures that characterize the food delivery business model.
This warning from Delivery Hero underscores the volatile nature of the food delivery market and the regulatory challenges it faces. Investors and industry observers will be carefully monitoring the situation as it unfolds.
