The European Commission has imposed a €329 million fine on German-based Delivery Hero and its Spanish subsidiary Glovo for engaging in a multi-year cartel that disrupted competition in the online food delivery sector across the European Economic Area (EEA).
According to the Commission’s findings, from July 2018 to July 2022—spanning the period in which Delivery Hero gradually increased its minority stake in Glovo to full control—the two companies coordinated on key aspects of competition. Their conduct included a no-poach agreement that began with limited reciprocal clauses and later expanded into a broad pact not to solicit each other’s employees. They also exchanged commercially sensitive information, such as data on pricing strategies, costs, and market capacity. In addition, they engaged in market allocation by mutually agreeing not to enter each other’s national markets and by coordinating their expansion into new ones.
The Commission classified these practices as a single and continuous infringement of Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement. That’s the EU decision, for more information, you can check the regulator’s press release.
Delivery Hero Stock price is up 1.80%, why?
It may sound counterintuitive, but why does a company’s stock price rise after receiving a €329 million fine? First, we can’t simply ignore the fact that investors may not have seen this yet, and the impact on the stock will occur in the following days, so watch closely. But if they did, the key lies in the provision. Delivery Hero made a €400 million provision in July 2024 to cover any potential liability from this investigation.
It turns out the liability was about 20% lower than anticipated, so the company can reallocate those funds elsewhere. And considering its negative net income and relatively low cash flow, that’s good news for investors.
The company has already issued a statement to reassure investors that everything is under control:
“The remaining provision will be released and normalized through management adjustments without impacting the company’s Adjusted EBITDA for the period,” the company’s press release said.
Delivery Hero’s Legal Risks
Once that legal risk is over, time to move on to the next risk. Yes, for investors this is over, now it is time to pay, but they have certainty about the amount. The German company has disclosed several legal risks that could significantly impact its cash flow and impair revenue in the near future. Delivery Hero has set aside provisions totaling nearly €900 million to cover these risks, €400 of those for this fine.
A second major legal provision relates to the reclassification of workers and associated VAT liabilities. In Spain, Glovo had previously classified its riders as self-employed contractors, but regulatory actions forced the company to reclassify them as employees. Delivery Hero has set aside €492 million to cover potential fines, retroactive social security contributions, and unpaid VAT obligations.
This reclassification is expected to have a long-lasting negative impact on the company’s bottom line, affecting profitability for years to come.
This latest enforcement action adds to the growing legal and regulatory pressure facing Delivery Hero. For deeper analysis of how these issues are shaping investor sentiment—and why rivals like Deliveroo and Just Eat Takeaway have attracted acquisition offers while Delivery Hero has not—read our related editorial:
👉 Why Deliveroo and Just Eat Takeaway Got Acquisition Offers and Delivery Hero Didn’t
