Table for none – European Commission serves fines for Labor Market Cartel

Setting the table

The decision marks the first instance in which the Commission has imposed sanctions for a no-poach agreement.

No-poach agreements – also referred to as "no-hire", "non-solicit", or "no-cold-calling" agreements – are arrangements under which undertakings commit not to solicit or hire each other’s employees. Such practices can depress wages, hinder the efficient allocation of talent, and ultimately weaken competition in the labor market. For these reasons, competition authorities have increasingly placed them on their enforcement radar as potential infringements of competition law.

In the case at hand, Delivery Hero entered into a shareholders’ agreement when acquiring a minority, non-controlling stake in Glovo. This agreement initially contained narrowly scoped reciprocal no-hire clauses relating to certain managerial staff. Over time, however, these provisions were broadened into a general understanding not to actively approach each other’s employees. According to the Commission, this arrangement restricted competition for high-skilled personnel and limited employment opportunities for workers. Commissioner Teresa Ribera further observed that no-poach agreements inhibit labor mobility and prevent workers from contributing where they are most effective – thereby dampening overall productivity and innovation.

Beyond the anti-competitive labor market conduct, the Commission also found separate infringements unrelated to employment practices. These included market-sharing agreements and the exchange of commercially sensitive information between Delivery Hero and Glovo.

Strikingly, the Commission’s press release frames the no-poach agreement as the primary infringement among the three sanctioned practices – despite the fact that market-sharing and information exchange have traditionally ranked among the most serious breaches of competition law. In her accompanying remarks, the Commissioner expressly stated that “the importance of this case” lies in its focus on no-poach conduct. This highlights the increasing priority the Commission assigns to safeguarding competitive conditions in labor markets. Accordingly, our analysis will center on the Commission’s assessment of the no-poach agreement.

Serving what was promised – The policy brief comes to life

In many respects, the Commission’s decision in Delivery Hero/Glovo closely follows the blueprint laid out in its 2024 Competition Policy Brief.

Hard-boiled or scrambled? The legal debate over ‘by object’ restrictions

In particular, the Commission’s general assessment of no-poach agreements appears firmly rooted in the principles it outlined in that policy document.

There, the Commission characterized no-poach agreements as a form of market sharing within the meaning of Article 101(1)(c) TFEU. As such, they would fall into the category of restrictions “by object” – agreements presumed to harm competition without requiring an effects-based analysis. In practice, this classification allows the Commission to dispense with any case-by-case assessment of actual or potential anti-competitive effects. Although the full text of the Delivery Hero/Glovo decision has yet to be published, the Commission’s press release makes no mention of any such effects-based inquiry – indicating a firm adherence to the per se approach outlined in the policy brief.

Yet this rigid stance is not without its critics. From a more economic and functional perspective, there are persuasive arguments that no-poach agreements may not always be inherently anti-competitive. In certain cases, such arrangements may serve legitimate pro-competitive purposes – for instance, by safeguarding investments against hold-up risks or by protecting trade secrets and confidential business information. A more differentiated approach may thus be warranted.

Indeed, signs of a potential shift are already visible. In his recent opinion in the preliminary ruling procedure Tondela and Others, currently pending before the Court of Justice of the European Union, Advocate General Emiliou suggested that certain no-poach agreements might merit a more nuanced, effects-based analysis. Should the court follow this reasoning, it could open the door to a more flexible framework in which not all no-poach clauses are automatically equated with hardcore cartel conduct.

Seasoned with exceptions? When no-poach clauses may survive

While all this may suggest the broth is irreparably spoiled, there remains a potential dash of seasoning to salvage the dish. As we noted in our previous blog post, even restrictions classified as “by object” under Article 101(1) TFEU are not necessarily beyond redemption. Provided certain conditions are met, such agreements may still benefit from exemptions under EU competition law.

First, Article 101(3) TFEU offers a safe harbor for agreements that, despite falling within the scope of Article 101(1) TFEU, demonstrably improve production or promote technical or economic progress – provided that consumers receive a fair share of the resulting benefits. To qualify, the agreement must also be indispensable to achieving those efficiencies.

Second, the ancillary restraints doctrine may come into play. Under this doctrine, a restriction is not prohibited under Article 101(1) TFEU if it (1) is directly related and subordinate to a legitimate main agreement between the parties, (2) is strictly necessary to its implementation, and (3) remains narrowly tailored in terms of personnel covered, geographic scope and duration.

In the Delivery Hero/Glovo case, it is safe to assume the Commission examined whether the no-poach clause could be considered ancillary to the underlying shareholders’ agreement. Unsurprisingly, the Commission found that it was not. In its 2024 policy brief, the Commission had already made clear that no-poach clauses can only be deemed ancillary if they are limited to specific employees who are essential to executing the main agreement. A blanket clause covering all employees – as was ultimately the case between Delivery Hero and Glovo – clearly exceeded those boundaries.

Notably, even the initial iteration of the clause, which was confined to managerial staff, appears to have been viewed as disproportionately broad. The Commission’s treatment of the case thus confirms its strict interpretation of both Article 101(3) TFEU and the ancillary restraints doctrine in the context of labor market restrictions.

A taste of things to come…

The European Commission’s decision in Delivery Hero/Glovo sets a landmark precedent in competition law enforcement. It sends an unambiguous signal: the Commission intends to uphold fair competition in labor markets with the same rigor it applies to more traditional product and service markets. Undertakings would therefore be well advised to remain alert and ensure that their employment-related practices align with the evolving expectations of EU competition law.

In particular, companies may wish to reassess existing agreements aimed at employee retention. Going forward, the Commission is likely to expect undertakings to have explored less restrictive alternatives before resorting to no-poach clauses. Such alternatives might include non-disclosure agreements, minimum contract durations, or non-compete clauses – provided these are compliant with applicable national labor laws.

As the Delivery Hero/Glovo case was resolved through a settlement, the legal issues at stake are unlikely to receive judicial scrutiny in this instance. A review by the EU courts could have offered welcome guidance on how no-poach agreements are to be assessed under Article 101 TFEU. Nevertheless, further clarification may be on the horizon: the pending preliminary ruling in Tondela and Others offers the Court of Justice an opportunity to engage more deeply with the legal treatment of such agreements. We will continue to monitor developments and report on the outcome of that procedure in due course.

Digestif – What companies now need to stomach

The Delivery Hero/Glovo decision marks yet another first: it is the Commission’s first case in which a company – Delivery Hero – was fined for anti-competitive conduct in the context of a minority, non-controlling shareholding in a competitor.

In that regard, the ruling also serves as a pointed reminder that such minority interests do not create a “single economic entity” shielded from the application of Article 101 TFEU. On the contrary, as Commissioner Ribera explicitly warned, minority shareholdings may entail considerable competition law risks. A shareholder in such a position must refrain from any conduct that exceeds what is strictly necessary to safeguard its investment.

Authored by Christian Ritz, Friedrich Preetz, and Florian von Schreitter.