Antitrust on the Menu: No-Poach Deals and Minority Stakes stir up the food delivery sector

Delivery Hero and Glovo are two of the largest food delivery companies in Europe. In short, they deliver food (prepared by a restaurant or professional kitchen), grocery and other retail (non-food) products to customers ordering from an app or website.

Back in July 2018, Delivery Hero acquired a minority, non-controlling stake in Glovo and progressively increased this stake through subsequent investments. In July 2022, Delivery Hero acquired sole control of Glovo.

The Commission found that, during the period in which Delivery Hero owned a minority stake in Glovo (i.e. July 2018 until July 2022), the two companies engaged in the following anti-competitive practices:

• No-poach deal. The shareholders' agreement signed at the time Delivery Hero acquired the minority stake included limited reciprocal no-hire clauses for certain employees. Shortly thereafter this arrangement was expanded to a general agreement not to actively approach each other's employees.
  
  
• Exchange of commercially sensitive information. The companies shared information on commercial strategies, prices, capacity, costs and product characteristics, enabling the companies to align and influence their respective market conduct.
  
  
• Geographic market allocation. The two companies agreed to divide among themselves the national markets for online food delivery in the EEA, by removing all existing geographic overlaps between them, by avoiding entry into their respective national markets, and by coordinating which of them should enter into markets where neither was present yet.

Competition law is increasingly relevant for employers, as competition authorities across the globe focus on employment and labour market practices. No-poach and wage-fixing arrangements are a particular focus area for enforcement. Whilst the US has already been actively enforcing competition compliance in labour markets, this is the first time that the European Commission has found competition law breaches in the labour space.

The Commission's infringement findings are not surprising. In May 2024, the Commission published a policy brief stating, in a nutshell, that no-poach (and wage fixing) agreements between undertakings generally qualify as restrictions of competition 'by object' under Article 101(1) TFEU. This sentiment was largely followed by the recent Opinion of AG Emiliou in the Portuguese Football case, whilst adding that "context always matters". The Court of Justice is yet to rule. The Commission's policy brief also took the view that there is no real distinction between agreements not to either 'actively' approach or 'passively' recruit a competitor's staff, as opposed to an (arguably narrower) restriction on 'active' poaching only (which appears to be the case in Delivery Hero/Glovo).

The Delivery Hero/Glovo decision comes hot on the heels of the UK's first fine for labour market breaches earlier this year (for wage fixing).

Another landmark aspect of the Commission's decision is the sanctioning of anti-competitive practices stemming from the use of a minority shareholding. Delivery Hero's involvement was characterised by its minority (non-controlling) interest in Glovo, which it used to effectively curtail competitive rivalry between the two companies. This case is therefore a useful reminder that competition law continues to apply to businesses where one has a minority interest in the other, and that those businesses need to continue to be independent competitors rather than coordinating their conduct on the market.

Of course, this strict approach of competition law can run counter to the common intent of some such arrangements, where the aim of the minority shareholding is to provide a foothold towards the development of a future relationship between the two businesses. However, this case is a reminder that such commercial intentions behind an investment do not operate as a justification should such coordination come to the attention of competition authorities.

Heightened competition enforcement in labour markets looks set to stay – a trend now cemented by the Commission's first sanction in this space. Businesses should be acutely aware that no-poach (and wage-fixing) arrangements are squarely within global focus and that the consequences of breaching competition laws can be severe (with fines of up to 10% of global turnover, potential private damages claims and, at the UK level, the risk of individual sanctions such as director disqualification). Interactions between businesses on labour issues should therefore be viewed with the same caution as those regarding typical parameters of competition (such as price, innovation etc).

In this case, Delivery Hero and Glovo's downstream activities overlapped in the supply of food delivery services. However, interactions between businesses on labour issues can infringe competition law regardless of whether or not they compete at the downstream level (because, by virtue of their conduct in agreeing to no-poaches or wage-fixing, they will be seen to be competing on the upstream labour market).

Businesses should also be aware that minority, non-controlling shareholdings do not immunise conduct from antitrust scrutiny – even if there may be a plan to build up the businesses' shareholding in its rival to a full control scenario in future. Where a minority stake falls short of control, the underlying businesses will be treated as independent competitors and, hence, subject to competition laws.