Glovo and Delivery Hero fall foul of Egyptian regulators

The efforts of delivery services Delivery Hero and Glovo to carve up African markets between them are not going down well with some local regulators. In June, Barcelona-based Glovo abruptly reversed its April decision to leave the Egyptian market, which it had entered the previous year. This had left Berlin-based market leader Delivery Hero in an even stronger position in the local market.

Delivery Hero became the largest single shareholder in Glovo following a 2018 funding round, and it currently holds a 16% stake in its Spanish rival. In the aftermath of this deal, the two companies have engaged in what might be termed “market swapping,” with Glovo exiting some markets where Delivery Hero was present and vice versa. For example, Glovo left the Chilean market and Delivery Hero exited Peru on the same day (April 30 – also the date on which Glovo quit Egypt).

However, in Egypt, pressure from local regulators has led to a volte-face on the part of Glovo. In a statement issued on June 26th, The Egyptian Competition Authority (ECA) commented “Following the ECA’s decision regarding the anti-competitive practices of Delivery Hero, operating in Egypt through Otlob and Carriage, and Glovo, the ECA received binding commitments from both parties to address the ECA’s concerns and to comply with Egyptian Competition Law.”

It added that “Delivery Hero shall not use its rights as a shareholder in Glovo to influence the latter’s strategic decisions regarding operations in Egypt. Additionally, both parties have committed not to exchange confidential information regarding Glovo’s operations in Egypt.”

The Sagaci Research view: A win for Egyptian consumers and a lesson in competition law for two tech start-ups