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Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

ECA Lists Reasons behind Glovo's Exit from Market


Wed 29 May 2019 | 12:24 AM
Taarek Refaat

The Egyptian Competition Authority (ECA) has revealed, following investigations, that Spanish on-demand courier service Glovo and Delivery Hero have been following monopolistic practices that violate Article 6 of the Competition Protection Act (CPA).

The investigations showed that an agreement was made between the two services to undermine competition. "This agreement was the main reason for the company's exit from the Egyptian market," ECA stated.

The two companies had agreed to pide the market between them to ensure a monopoly over the service in Egypt. "This practice has undermined competition in the online delivery services," the ECA said in a report.

The authority decided to obligate the two companies to immediately terminate any signed contracts between them and to restore the status quo prior to these agreements.

In addition, the ECA requested Glovo to resume its operations in the Egyptian market after implementing the decisions taken by the authority within a maximum of 30 days from the date of notification.

Glovo's sudden exit from the Egyptian market on April 30 raised suspicious concerns.

[caption id="attachment_53780" align="aligncenter" width="763"] Glovo's rider delivering food[/caption]

In 2018, Delivery Hero acquired 16 percent of Glovo's shares. Following the acquisition, Hero gained access to confidential data regarding its strongest competitor in the Egyptian market. The acquisition was also a way to manage some of the strategic decisions in Glovo, leading to its exit from the market.

The company's exit from the Egyptian market contributed to the loss of jobs in the country, undermined competition, as well as narrow alternatives provided for consumers.

Glovo was providing innovative service in the delivery service, and in a short time, the company had gained a large market share.

Meanwhile, the exit of the company from the market will extend Delivery Hero's competitive advantage, strengthening its monopolistic practices in the market.

The case emphasizes the role of the ECA in protecting competition and Foreign Direct Investment (FDI) in the country.

In the interim, Glovo faces fierce protests following the death of a 22 years old rider. A Nepalese national Pujan Koirala was hit by a garbage truck during a delivery in the Spanish capital Barcelona last Saturday.

[caption id="attachment_53781" align="aligncenter" width="760"] Workers burn backpacks before the headquarters of Glovo in Barcelona[/caption]