Delivery Hero faces $433m EU fine

German company Delivery Hero has said it could face a “significant” fine for alleged antitrust violations.

The online delivery service warned in a statement on its website on Sunday (July 7) of a potential $433 million fine.

The fine would be imposed “for an alleged anti-competitive agreement regarding the allocation of domestic markets, exchange of confidential commercial information and non-poaching agreements,” Delivery Hero reported.

The company said it plans to cooperate with the European Commission (EC), which conducted unannounced inspections in July 2022 and November 2023. The company said it would also raise a corresponding reserve of €186 million ($201 million).

Reuters’ report on the fine imposed on Monday (July 8) includes comments from analysts at Jefferies, who wrote in a note that the biggest risk to Delivery Hero is not the size of the fine, but “the fact pattern it creates.”

As noted here last year, the EC’s inspections were part of an investigation into potential breaches of European Union antitrust rules, including violations of “no-poach” agreements, which see companies refrain from hiring workers from other companies or impose restrictions on workers providing services on rival platforms.

Delivery Hero recently sold its foodpanda business in Taiwan to Uber for $950 million, a sale that aims to scale back its operations in Asia.

“With its current presence in Taiwan, Uber is best positioned to build on the significant local operations that Delivery Hero and foodpanda have developed over the past years and continue to invest in enhanced experiences for consumers, merchants and delivery partners,” the companies said in a press release in May.

The potential fine comes as delivery platforms face increasing pressure from falling customer numbers and rising driver wages.

A Financial Times report from May found that the four largest publicly traded US-European delivery apps — DoorDash, Just Eat Takeaway, and Deliveroo and Delivery Hero — have recorded a combined loss of $20.3 billion since going public.

Meanwhile, cities like New York and Seattle have passed laws that have raised driver wages, which has caused companies like DoorDash and Instacart to raise their fees. According to a recent Wall Street Journal report, that has led some diners to cut back on ordering.

And according to an Intelligence study titled “Connected Dining: Rising Costs Push Consumers Toward Pickup,” it’s a trend that’s already underway, showing that nearly 60% of takeout customers would rather pick up their meals in person and avoid paying delivery fees.

Additional insights from the Connected Dining series found that 50% of restaurant customers who don’t use aggregators avoid them because they believe the services are too expensive.