Delivery Hero shares fall ahead of potential antitrust fine of over €400 million

Shares of Delivery Hero SE, one of the world’s largest food delivery companies, fell more than 17% today on fears it could face a hefty antitrust fine.

The company closed the trading session with its share price down 7.2%.

Berlin-based Delivery Hero launched in 2011 and went public six years later. It operates more than a dozen food delivery services supported by hundreds of logistics facilities. The company generated €3 billion in revenue from those services in the last quarter, up 21% from a year earlier, but has yet to turn a profit.

Today’s sell-off in shares comes after Delivery Hero disclosed on Sunday that the European Commission could fine the company more than 400 million euros, or $433 million. Antitrust officials are said to be concerned about “an alleged anticompetitive agreement to share domestic markets, exchange commercial information and non-acquisition agreements.” Delivery Hero did not elaborate.

According to a research note from Jefferies Group LLC cited by Reuters, the fine may be a consequence of a recent series of deals between Delivery Hero and Glovo, another food delivery service.

In 2020, Delivery Hero signed a €230 million deal to acquire Glovo’s Latin American operations. The following year, Glovo bought three food delivery services originally run by Delivery Hero for €170 million. Finally, in 2022, Delivery Hero acquired majority stake in Glovo.

At the same time as the majority share change, European Union competition officials carried out unannounced inspections of both companies’ offices. A second round of inspections took place last year. TThe European Commission said at the time that it was investigating “alleged market partitioning practices” as well as “additional conduct in the form of alleged anti-market capture agreements and exchanges of confidential commercial information.”

In response to the scrutiny, Delivery Hero has set aside €186 million to cover regulatory costs. In its Sunday warning of a potential antitrust fine, the company said it intended to increase that amount. The Jefferies note said the primary challenge for Delivery Hero is not the size of the penalty or its ability to cover costs, but rather the “fact pattern it creates.”

Delivery Hero joins a growing list of tech companies facing regulatory scrutiny in the European Union. Last week, the European Commission he asked Amazon.com Inc. to obtain information about compliance with the Digital Services Act of the bloc. A few days earlier, officials initially Meta Platforms Inc. was found to have violated regulations related to a law known as the Digital Markets Act.

Photo: Delivery Hero