Labor markets have increasingly drawn the attention of the European Commission (“Commission”) and national competition authorities in the EU. As early as 2021, then-Competition Commissioner Vestager listed “no-poach” agreements and wage-fixing arrangements as enforcement priorities.
With some delay, the Commission is now beginning to follow its words with action: On June 2, the Commission adopted a decision against Delivery Hero and its subsidiary Glovo, imposing fines totaling €329 million for anticompetitive conduct that occurred between 2018 and 2022. This decision is also significant because the EC found that a firm used its minority shareholding in a competitor to facilitate anticompetitive coordination.
The EC found that an anticompetitive scheme was comprised of three interconnected practices. According to the Commission’s press release, Delivery Hero and Glovo:
- entered a no-poach agreement, agreeing not to hire each other’s employees, suppressing competition for labor and potentially harming wage levels, employee mobility, and innovation,
- exchanged commercially sensitive information, including data on pricing, strategy, capacity, and product characteristics, beyond what was necessary for Delivery Hero as the minority shareholder to oversee its investment, and
- engaged in illegal market sharing by allocating geographic territories.
The Commission relied on WhatsApp chats showing that Delivery Hero and Glovo coordinated market entry in EU countries where neither had a presence, sold businesses to one another to remove their geographic overlaps, and refrained from entering market where the other was already present.
Delivery Hero was fined €223 million, and Glovo €106 million. Both companies acknowledged their involvement and settled the case.
Landmark Case: First EU Fine for No-Poach and Strategic Use of Minority Stake
Several national competition authorities within the EU have already sanctioned no-poach agreements, typically in the context of broader cartel arrangements.
This case, however, is particularly noteworthy because it is both: (i) the first time that the Commission has sanctioned a cartel in the labor market and (ii) the Commission’s first instance of penalizing anticompetitive use of a minority shareholding in a competing business.
The infringement occurred while Delivery Hero held a minority stake in Glovo – in anticipation of a full acquisition in 2022. According to the Commission’s press release, this minority shareholding “enabled” anticompetitive interactions between the two companies and gave them a channel to coordinate their strategies and operations.
This case underscores the Commission’s growing focus on labor market restrictions and shows that minority cross-shareholdings between competitors can potentially raise serious competition law concerns. Companies with minority shareholdings in competitors should carefully assess their governance and information-sharing practices to mitigate antitrust risks.
No-Poach Agreements
No-poach arrangements are a form of purchasing cartel where companies collude to suppress competition over a key input— namely labor. According to the Commission, by agreeing not to hire each other’s employees, Delivery Hero and Glovo effectively limited workers’ bargaining power and freedom to switch employers, distorting the normal functioning of the labor market.
In essence, such agreements may eliminate or (where the agreement is less than a complete prohibition on hiring, e.g., an agreement not actively to solicit one another’s employees) reduce the intensity of competition between companies for talent. Such agreements can harm employees by suppressing wages or making other terms of employment less employee-friendly and reducing opportunities for career advancement. Moreover, by restricting free movement of workers, these arrangements may hinder optimal allocation of skills across the economy. As a result, no-poach agreements can also impede an industry’s performance by lowering productivity and stifling innovation (see Remarks by Executive Vice-President Ribera on the adoption of a cartel settlement decision against Delivery Hero and Glovo, Brussels, 2 June). The European Commission had previously expressed its intention to classify types of no-poach agreements as restrictions of competition by object in its Policy Brief on Antitrust in Labor Markets of May 2024 (see Aresu, A., Erharter, D., and Renner-Loquenz, B. (2024), Antitrust in Labour Markets, Competition policy brief, Issue 2, May 2024).
Information Exchange
According to the Commission’s findings, Delivery Hero’s minority shareholding in Glovo facilitated close and sustained interaction between the companies’ executive teams. Delivery Hero and Glovo exchanged internal documents, including strategic plans, and had regular meetings to share commercially sensitive information with each other. These interactions extended beyond what would typically be justified for a minority-shareholder’s oversight of its financial investment. In addition, there was no justification from the outset for Glovo to receive sensitive information about its shareholder.
The information exchanged encompassed current and future pricing strategies and broader commercial plans such as promotional offers and market positioning. These bilateral exchanges enabled both companies to anticipate and potentially align their market conduct by reducing uncertainty regarding one another’s strategies. As a result, the Commission found that rather than competing independently, the companies coordinated their strategies, potentially diminishing pricing competition or service quality in the market.
Market Allocation
The Commission also found that the two companies allocated national markets for online food delivery services in the European Economic Area (EEA). According to the Commission’s findings, Delivery Hero leveraged its minority shareholding in Glovo to facilitate market-sharing arrangements through two mechanisms: (i) directly, by exercising or threatening to exercise its approval rights over certain strategic decisions, and (ii) indirectly, by exerting influence over other Glovo shareholders. As a result, in several EEA countries, consumers were deprived of the ability to compare offerings between the two platforms, which limited consumer choice and potentially harmed price and service quality competition.
Minority Shareholdings in Competitors
Owning a minority interest in a competitor is not, by itself, problematic under EU competition law. However, it may raise concerns where it facilitates exchanges of commercially sensitive information or enables the shareholder to exert influence over the other company’s strategic decision-making in a manner that may restrict competition.
Where one competitor owns a minority interest in another, both companies must compete independently. Thus, agreements, coordination, and information exchanges involving the minority shareholder that restrict competition are in principle prohibited under Art. 101 TFEU. Even if the minority shareholder later acquires the target (as happened in this case), the prohibition applies until the day when the former minority shareholder acquires full control over the target.
Minority shareholdings raise particular concerns where they enable access to sensitive information or could facilitate coordination. This may particularly be the case in the following circumstances:
- Personal links (e.g., overlapping board members or minority-shareholder representatives in the target company that are involved in competitive decision-making for the minority shareholder) can create opportunities for problematic information flow.
- The German Federal Cartel Office (BKartA) has emphasized that even indirect information flows – for example, through shareholder meetings or supervisory boards – can restrict competition if they make it easier for rivals to compete less independently. The BKartA has observed that shareholder status typically gives access to competitively sensitive information, which may reduce the robustness of competition between the minority shareholder and the target.
Practical Implications
This Commission decision is a reminder that companies with minority interests in competitors should carefully assess and implement measures to mitigate antitrust risks, such as
- assessing the scope of information rights and the flow of competitively sensitive information – access should be limited to information that is necessary for the minority shareholder to oversee its investment, information should not be transferred to personnel who are responsible for competitive decisions for products that compete with the target, and the minority shareholder should not be providing its own information to the target;
- Implementing robust compliance protocols to prevent inappropriate information sharing;
- Ensuring that representatives on boards or shareholder bodies are trained to recognize and avoid antitrust risks; and
- Considering structural safeguards (e.g., internal firewalls) where minority shareholdings could raise competition law concerns.
Looking Ahead: Continued Scrutiny of Labor-market collusion and Minority Shareholding between Competitors
With this decision, the Commission has reaffirmed its commitment to actively monitoring competition in labor markets and indeed consumer markets. The case also underscores the Commission’s increasing scrutiny of minority shareholdings between competitors where such arrangements may facilitate anticompetitive conduct.
