New horizons in competition law enforcement: the Delivery Hero / Glovo case

On 2 June, the European Commission announced that it had imposed fines totalling 329 million euros on Delivery Hero and Glovo for their participation in a cartel in online food delivery services.

In particular, as competitors, the two companies allegedly agreed not to take each other's employees, exchanged commercially sensitive information and shared geographic markets. The sanction comes after a settlement procedure, where both companies allegedly cooperated with the European Commission in exchange for a reduction in the amount of the fines.

What is interesting about the case is that it is the first decision in which the Commission has sanctioned a cartel in the labour market. On the other hand, it is the first occasion in which the Commission has sanctioned an anti-competitive agreement in the context of a minority shareholding of one competing company in another.

In both cases, the European Commission offers us some key messages that every company should incorporate into its actions in the market.

On the one hand, it is indisputable that action against anti-competitive agreements in labour markets has become a priority for European and international competition authorities.

In May 2024, the European Commission issued a warning in its Competition Policy Brief, in which it clarified that wage-fixing and non-employment agreements between competitors were restrictions "by object" - i.e. harmful to the market by their very nature.

Since then, authorities in several countries such as Belgium, Finland, France, the United Kingdom, Portugal, the Netherlands, Hungary, Spain, the United States, Brazil or Colombia, to name but a few, have investigated and, where appropriate, sanctioned anti-competitive conduct in the labour field.

The sanctioning of Delivery Hero and Glovo reinforces the message that both the European Commission and national authorities intend to pay the utmost attention to possible distortions of competition in relation to labour markets.

This scrutiny is particularly intense in relation to wage-fixing and non-hiring agreements between competitors. But attention will also have to be paid to issues such as collective bargaining or non-solicitation clauses and similar restrictions in M&A transactions, distribution or other agreements.

This is also the first time that the European Commission has sanctioned the anti-competitive use of a minority shareholding in a competing company. In particular, the Commission found that, during the period from July 2018 to July 2022 - i.e. from the time Delivery Hero acquired a minority stake in Glovo until it eventually acquired sole control of Glovo - both parties coordinated and influenced each other's behaviour on the market in an anti-competitive manner.

As the European Commission itself points out in its press release, owning a stake in a competitor is not in itself illegal, but it can be a double-edged sword.

Indeed, on the one hand, the fact that a minority shareholding is not subject to the merger control regime and therefore to prior clearance spares the acquirer from ex ante scrutiny of the transaction by the competition authorities. This allows it to be implemented more quickly and without the risk of imposing conditions or prohibition.

On the other hand, however, this situation entails a higher risk of anti-competitive behaviour, as the acquiring and the investee remain competitors and must at all times behave as such. In particular, cross-shareholdings between competing companies or the representation of one in management and supervisory bodies of the other significantly increase the risk of anti-competitive conduct. Indeed, in such scenarios, one competitor may gain access to commercially sensitive information of the other or influence the other's strategic decision-making, when effective competition relies precisely on these decisions being taken autonomously in the uncertainty of what the competitor will do.

Finally, this case makes clear the need for companies that already have or intend to make minority investments in competing companies to have robust safeguards and protocols in place to control the flow of commercially sensitive information and prevent other types of anti-competitive behaviour.

In practice, companies should analyse the appropriateness of adopting enhanced confidentiality measures, clean team agreements, lifting of firewalls, appointment of third party trustees to manage information, training activities for key personnel or other measures aimed at limiting the exchange of information to what is strictly necessary for the minority shareholder to supervise the success of its investment.

In short, the sanctioning of Delivery Hero and Glovo reminds us once again of the importance of companies and their advisors adopting a proactive attitude in recurrently reviewing their practices and strategies, particularly in relation to labour markets and investments in potential competitors, to ensure strict compliance with a constantly evolving and intensely enforced competition law.

Article written by Rafael Piqueras, partner at ECIJA Madrid, for El Confidencial.