EU fines Delivery Hero and Glovo $376 million for running a food delivery cartel

The EU on Monday slapped German food delivery company Delivery Hero and its Spanish subsidiary Glovo with a fine worth 329 million euros ($376 million) after they violated antitrust rules.

EU regulators concluded Delivery Hero used its stake in Glovo between 2018 and 2022 to limit competition by exchanging sensitive information, agreeing not to poach each other’s employees, and to divide among themselves national markets for food delivery.

Based in Germany, Delivery Hero has held a 94 percent stake in Spain’s Glovo since July 2022, but the EU’s formal probe — launched last year — focuses on the period before it took sole control.

They are two of the biggest food delivery companies in Europe, delivering meals from restaurants, grocery shopping and other non-food products to customers at home ordering via their apps or websites.

The European Commission, which acts as the EU’s competition watchdog, said the two companies admitted their involvement in the cartel and agreed to pay the fines to settle the case.

“Cartels like this reduce choice for consumers and business partners, reduce opportunities for employees and reduce incentives to compete and innovate,” it said.

Delivery Hero will have to pay a fine worth 223 million euros, while Glovo must pay around 106 million euros, the commission said.

“This case is important because these practices were facilitated through an anticompetitive use of Delivery Hero’s minority stake in Glovo,” EU competition chief Teresa Ribera said in a statement.

The two companies had agreed not to actively steal each other’s employees, initially covering managers before it was extended to all staff including logistics experts.

Their agreement did not cover delivery drivers who were not employees at the time of the infringements, but classified as self-employed.

The EU’s decision is the first where the commission finds a cartel in the labour market and Ribera said it was “also the first time the Commission is sanctioning a no-poach agreement, where companies stop competing for the best talent and reduce opportunities for workers”.

Cartel by WhatsApp

The two companies exchanged commercially sensitive information regarding prices and costs via email as well as WhatsApp chats where, for example, officials would discuss which markets to enter.

The commission said Delivery Hero and Glovo agreed to avoid entering countries where one company was already present, and coordinated which one should enter in markets where neither had a presence yet.

As of July 2020, the two companies had fully ceased to compete with each other by carefully avoiding being present in the same markets, reducing consumer choice and thus contributing to higher prices.

Delivery Hero confirmed it had reached a settlement agreement with the commission in the antitrust probe, saying it had already set aside a provision for the fine.

“Today’s settlement allows Delivery Hero to address the European Commission’s concerns while allowing stakeholders to move on swiftly,” it said in a statement.

Delivery Hero provides its services in more than 70 countries worldwide including 16 from the European Economic area (EEA) including the EU’s 27 states as well as Iceland, Liechtenstein, and Norway.

Glovo, now Delivery Hero’s subsidiary, is present in over 20 countries worldwide, including eight in the EEA.

This story was originally featured on Fortune.com