Online food delivery sector under scrutiny by European Commission

The European Commission has opened an investigation into possible anti-competitive agreements in the online food delivery sector. The formal antitrust investigation aims to establish whether Europe’s two largest food delivery companies, Delivery Hero and Glovo, have breached EU competition rules by participating in a cartel manipulating the online ordering and delivery of food, groceries and other everyday goods in the European Economic Area (EEA).

Since July 2018, Delivery Hero held a minority stake in Glovo before acquiring sole control of the latter four years later in 2022. In June 2022 and November 2023, the Commission carried out unannounced inspections at the premises of Delivery Hero and Glovo as part of its own-initiative investigation into possible collusion in the food delivery sector.

The EC wants to establish whether, before the takeover, the two companies may have allocated geographic markets and shared sensitive commercial information on sales strategies, prices, production capacity, costs, product features, etc. There are also concerns about whether the two companies may have agreed not to poach each other’s workers. Such practices may have been beneficial and facilitated by Delivery Hero’s minority stake in Glovo.

If proven, the companies’ conduct may breach EU competition rules prohibiting cartels and restrictive practices, which are prohibited by Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement.

Although the EC has made it a priority to conduct a thorough investigation, the opening of a formal investigation does not in any way prejudge its outcome.

The investigation is part of the EC’s efforts to ensure that the online food delivery and grocery sector offers consumers choice and reasonable prices. A young and dynamic market such as this can be susceptible to anti-competitive agreements and restrictive business practices, including cartels through market allocation, which can result in disguised market consolidation and potentially have negative effects on competition.

The current investigation is part of the EC’s efforts to ensure a fair labour market, where employers do not collude to limit the number and quality of opportunities for workers, but instead compete for talent. It is the first investigation based on non-takeover agreements to be formally initiated by the EC. It is also the first EC investigation into anti-competitive agreements that may have taken place in the context of a minority stake in a competitor undertaking by one of the operators.

Delivery Hero, headquartered in Germany, currently operates in over 70 countries worldwide and works with over 500,000 restaurants. Delivery Hero is listed on the Frankfurt Stock Exchange. Glovo, headquartered in Spain, is also involved in food ordering and delivery and currently operates in over 1,300 cities in 25 countries. In July 2022, Delivery Hero acquired a majority stake in Glovo, and Glovo became its subsidiary.