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Shares in Delivery Hero fell more than a tenth after the German online food delivery group revealed it faces a potential fine from the EU for anti-competition violations, as the bloc steps up its scrutiny on corporate practices.
The stock declined by as much as 17 per cent, before paring losses to 5 per cent by mid-morning, on the first trading session in Frankfurt since the company said it might face a penalty from the EU of more than €400mn.
The potential fine for “alleged anti-competitive agreement to share national markets, exchanges of commercially sensitive information and no-poach agreements” prompted a plan to “significantly increase” a previous €186mn provision, Delivery Hero said in a statement on Sunday.
The increased provision, which followed inspections from the commission in July 2022 and November 2023, was based on “recent informal engagement with the European Commission and subsequent detailed analysis”.
The EU said in November it was investigating allegations that online food delivery groups had colluded with rivals that they would not take each other’s workers, exchanged trade secrets and agreed on which locations to trade in. It did not name Delivery Hero.
The European Commission has been probing companies it suspects are breaking competition rules, including online delivery groups. Last month, the EU’s executive arm said it was carrying out inspections related to a long-running case involving tyremakers, on suspicions the groups were liaising with each other on prices, to the detriment of consumers.
Cases can often lead to hefty penalties and companies found guilty of breaking EU rules face fines of up to 10 per cent of their global turnover.
In the past five years the EU has imposed close to €4bn in fines for anti-competitive practices, according to its own statistics.
Berlin-based Delivery Hero said it intended to “fully co-operate” with the EU’s executive body, as it has during previous inspections.
The European Commission declined to comment on Monday.
Analysts from Bernstein said Delivery Hero’s announcement on Sunday was “not very positive for the stock as it could potentially delay the group’s trajectory to positive [free cash flow]”. The company in April said it was on track to deliver positive free cash flow in its 2024 financial year.
The analysts added such fines could “take a while to be enacted and therefore the short-term impact should be limited”.
Food delivery groups have faced a tougher macroeconomic environment after a pandemic-fuelled boost. Delivery Hero, for example, reported goodwill impairment losses of more than €1.6bn in 2022 and 2023.
This year, the group has disposed of some assets in a push to focus its resources and capital allocation. In May, Uber agreed to purchase its Foodpanda brand in Taiwan for $950mn and also acquire a 3 per cent stake in Delivery Hero for $300mn. The German group exited its minority stake in London-listed Deliveroo in January.
Additional reporting by George Steer in London