Berlin-based food delivery giant Delivery Hero has warned investors that it could “eventually” face antitrust fines of up to 400 million euros.
The move, previously reported by Reuters, follows unannounced raids by European Union authorities in July 2022 and November 2023 on the offices of Delivery Hero and its Spanish subsidiary, Globo.
The EU confirmed at the time that both companies had been inspected but did not name them. The European Commission said it was concerned about possible violations of competition laws that ban the formation of cartels and other restrictive trade practices.
In a note to investors on Sunday evening local time, Delivery Hero said it could face sanctions due to “alleged anti-competitive agreements to share domestic markets, exchange of commercially sensitive information and no-poach agreements.”
In its annual report last year, Delivery Hero said it had made a provision of 186 million euros following unannounced inspections in the EU.
“The intent to increase the reserve is based on recent informal discussions with the European Commission and subsequent detailed analysis,” the company wrote, explaining the amount of the increased reserve. “Delivery Hero intends to cooperate fully with the European Commission, as it did during the unannounced inspections in July 2022 and November 2023.”
The German giant acquired a majority stake in Glovo at the end of 2021, about six months after its Spanish rival spent heavily to merge its three sub-brands.
In the low-margin food delivery industry, rapid consolidation is common as companies compete to claim the top market position (or positions) to drive revenue.
Since the pandemic, with the lockdown-related food delivery boom now a distant memory, we have seen many companies pull out of the market and close down one after another, highlighting just how challenging the food delivery business model has become.