Delivery Hero warns it could face €400m antitrust fine

Berlin-based food delivery giant Delivery Hero has warned investors that it could “ultimately” face an antitrust fine of up to €400 million.

This event, previously reported by Reuters, is evidenced by unannounced raids by European Union authorities on the offices of Delivery Hero and its Spanish subsidiary Glovo, which took place in November 2023 and July 2022.

The EU did not name the companies at the time, though both confirmed the checks had taken place. The European Commission said it had concerns about potential breaches of competition rules involving cartels and other restrictive business practices.

In a note to investors issued Sunday evening local time, Delivery Hero said it could be penalized for “alleged anti-competitive agreements to divide domestic markets, exchange confidential commercial information, and non-poaching agreements.”

In its annual report last year, Delivery Hero said it had set aside €186 million to cover unannounced EU checks.

“The intention to increase the amount of the benefit is based on the recent informal engagement with the European Commission and the subsequent detailed analysis,” it said, explaining the increased amount that was set aside. “Delivery Hero intends to fully cooperate with the European Commission, as it did during the unannounced inspections in July 2022 and November 2023.”

The German giant acquired a majority stake in Glovo in late 2021 — about six months after the Spanish rival shelled out money to consolidate three of its sub-brands.

Rapid consolidation has become a hallmark of the low-margin food delivery industry as players compete to occupy the top one or two positions in markets, hoping to improve economic conditions.

In the wake of the pandemic, we’ve seen dozens of businesses shut down and stores shuttered as the pandemic food delivery boom became a distant memory — underscoring just how challenging the food delivery business model is.