Germany-based Delivery Hero and Spanish company Glovo have received fines totalling €329m for engaging in anti-competitive practices within the European Economic Area (EEA).

Both companies admitted their involvement and agreed to settle, with Delivery Hero fined €223.285m and Glovo €105.732m.

It marks the first time the European Commission has taken action against a cartel in the labour market and the misuse of a minority shareholding to facilitate anti-competitive coordination by imposing fines.

Whilst criminal fines are not insurable, such events are a reminder for the need for comprehensive management liability insurance.

Correctly worded D&O policies can provide advanced funds to cover for the costs associated with regulatory investigations and defence costs. Large scale investigations can often start with the interrogation of junior staff before working their way up to the C-Suite, therefore, boards should ensure their Management Liability policies encapsulate all personnel being investigated, not just statutory directors.

Also, such investigations and regulatory actions will require appropriately skilled top law firms to advise and help with the defence, which can be very expensive. Therefore, it is important to recognise that ground up investigations can involve significant costs making it important that companies ensure their D&O policy limits are sufficient.

The average cost of defending regulatory investigations in the EU is €1.5m, compared with $5m in the US while at the upper end of the scale, defence costs of tens or even hundreds of millions of dollars have been spent.

The EC's  decision sets an important precedent and confirms that no-poach agreements will be looked at by authorities as individual potential restrictions of competition.  This now applies only  at national level, but also at pan-European level, an issue that may affect international companies operating across the EU.

The  decision also highlights the importance of corporate structures analyses in EU competition law enforcement.  The fines show holding a minority stake in a competitor, instrumentalised to gain access to competitively sensitive information and to coordinate the commercial conduct of both companies, may be a significant finding to prove an EU competition breach.

As a result, businesses may need to review their shareholdings in companies in a given sector, their shareholder agreements, and other corporate structures they might have in place which could give rise to competition concerns.

The EU’s executive vice president for competition, Teresa Ribera said: “Of course, owning a stake in a competitor is not illegal. But it may be problematic when that stake is used to gain inside information and influence decisions in ways that can harm competition.”

For more information or a quotation on securing comprehensive D&O management liability insurance, please contact:

Eastern Europe

Vida.Jarasiunaite@wdenis.eu

Southern Europe

Christos.Hadjisotiris@wdenis.com

Western Europe &/or elsewhere worldwide

Mark.Dutton@wdenis.com