The European Commission has opened a formal inquiry to determine whether Glovo and Delivery Hero, the German-origin parent company, engaged in conduct that could restrict competition in the online food delivery market. In a Tuesday statement, the Commission noted the possibility that the two firms agreed to share markets and did not poach each other’s employees, while exchanging sensitive commercial information. The focus is on conduct prior to Delivery Hero gaining full control of Glovo.
The magnitude of any penalty will depend on whether the Commission finds evidence of a breach and whether the breach is categorized as minor or serious. The sanction could be linked to the companies revenue, potentially reaching up to ten percent of annual turnover, according to multiple legal sources consulted. Delivery Hero reported 2023 revenues of 10.5 billion euros and told investors that it has earmarked 400 million euros to cover a possible unfavorable outcome.
Glovo, founded in Barcelona in 2014, specializes in home delivery of meals and other goods. Since December 2021 it has been effectively owned by Delivery Hero, which previously held a minority stake starting in 2018. Glovo is headquartered in Berlin and stands as a major player in Europe’s delivery market. The company operates in seventy countries, with most activity in Europe, but it also has operations in Asia, Latin America, the Middle East, and Africa.
“Opening an investigation does not mean the Commission has reached a conclusion about a potential breach of competition law, nor does it prejudge the outcome,” Delivery Hero said in a statement, which Glovo also echoed.
The EU antitrust inquiry into this alleged wrongdoing has deep roots. Regulators first conducted inspections at Glovo and Delivery Hero facilities back in July 2022. The Commission has now formally launched the process, prompted by concerns of a possible clash of interests in the online food delivery sector.
New legal front
Glovo faces another high profile case as well. On September 16, Oscar Pierre, one of Glovo’s founders and chief executive, is scheduled to appear before a judge on charges related to workers rights. The executive is under investigation for allegedly denying basic rights to couriers by classifying them as independent contractors, a designation that courts and labor inspectors have deemed to fit employees. If Pierre is found guilty, prison terms could range from six months to six years.
Since its inception, the company has faced penalties and compliance demands totaling 253 million euros according to the latest inspectorate balance. The labor authority has also documented that 40,889 couriers were regularized after being classified as false independents on the platform, a status that should have been that of employees under a formal contract.