Germany’s Delivery Hero says it may face a “significant” fine over alleged antitrust violations.
The online delivery service warned of the potential $433 million fine on a statement on its website Sunday (July 7).
The fine would be “for alleged anti-competitive agreement to share national markets, exchanges of commercially sensitive information and no-poach agreements,” Delivery Hero said.
The company says it plans to cooperate with the European Commission (EC), which had conducted unannounced inspections in July 2022 and November 2023. The firm says it will also raise its corresponding provision, which was 186 million euros ($201 million).
A report on the fine Monday (July 8) by Reuters includes comments from Jefferies analysts, who wrote in a note that the biggest threat to Delivery Hero is not the amount of the penalty but “the fact pattern that it creates.”
As noted here last year, the EC inspections were part of an investigation into potential breaches of European Union antitrust rules, including violations of “no-poach” agreements, which involve companies refraining from hiring each other’s staff or imposing restrictions on workers providing services on competing platforms.
Delivery Hero also recently sold its foodpanda business in Taiwan to Uber for $950 million, part of its efforts to scale back operations in Asia.
“Due to its existing presence in Taiwan, Uber is best placed to build upon the significant local operations developed by Delivery Hero and foodpanda over the past years, and invest further into an improved experience for consumers, merchants, and delivery partners,” the companies said in a news release in May.
The potential fine comes as delivery platforms are facing increased pressure as diners cut back and driver wages grow.
A report in May by the Financial Times found that the four largest publicly-listed U.S./European delivery apps — DoorDash, Just Eat Takeaway and Deliveroo and Delivery Hero— had lost a combined $20.3 billion since going public.
Meanwhile, cities such as New York and Seattle have passed legislation which has raised driver wages, causing companies like DoorDash and Instacart to hike their fees. According to a recent Wall Street Journal report, this has led some diners to cut back on ordering.
And that’s a trend that was already underway, according to research from the Intelligence study “Connected Dining: Rising Costs Push Consumers Toward Pickup,” showing that close to 60% of takeout customers would prefer to pick up their meals and avoid paying delivery fees.
Additional insights from the Connected Dining series found that, among diners who do not use aggregators, 50% avoid them because they think the services are too expensive.
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