European Commission fines for antitrust violations in M&A involving no-poach agreements

In 2018, Delivery Hero successfully gained full control over Glovo through the acquisition of a minority stake. This merger raised concerns within the European Commission regarding potential anticompetitive practices, specifically in the context of no-poach agreements.

No-poach agreements are agreements between companies not to hire each other’s employees, which can limit job mobility and competition in the labor market. These agreements are particularly scrutinized in mergers and acquisitions (M&A) as they can have a significant impact on competition within the industry.

The European Commission has taken a strong stance against no-poach agreements in the M&A context. In this case, the Commission raised concerns that the acquisition of Glovo by Delivery Hero could result in reduced competition in the food delivery industry, which could harm consumers and other market players.

The Commission’s investigation into the merger focused on whether the no-poach agreement between the two companies would lead to a coordinated reduction in competition or market sharing. This could potentially harm consumers by limiting choice and leading to higher prices for food delivery services.

Delivery Hero and Glovo defended their merger, arguing that it would not harm competition in the market. They claimed that the acquisition would lead to increased efficiency and innovation, benefiting consumers and other market participants.

Despite these arguments, the European Commission ultimately found that the no-poach agreement in the context of this M&A deal could indeed harm competition. As a result, the Commission imposed conditions on the merger to address these concerns.

The case of Delivery Hero’s acquisition of Glovo highlights the importance of competition authorities scrutinizing M&A transactions to ensure that they do not harm market competition. No-poach agreements can have far-reaching effects on competition and consumer welfare, making them a key focus for regulatory bodies like the European Commission.

Moving forward, companies engaging in M&A deals must be aware of the potential anticompetitive implications of their agreements. By understanding and complying with competition laws, companies can ensure that their mergers do not run afoul of regulatory scrutiny and protect market competition for the benefit of consumers and businesses alike.