Competition Authority’s Statement o

The Egyptian Competition Authority (“ECA”) made headlines last week for sending a Statement of Infringement to two on-demand delivery companies, Delivery Hero SE (investor in Otlob and Carriage) and Glovo, following Glovo’s withdrawal from the Egyptian market.[1] ECA’s press release claimed that pursuant to a shareholders’ agreement between the parties, Delivery Hero pulled Glovo out of Egypt after an acquisition of a minority stake in Glovo’s parent company, in order to eliminate competition with Otlob and Carriage. ECA also claimed that these same agreements permitted Delivery Hero to access Glovo’s confidential and strategic information and thus influence its business decisions. ECA concluded that this would constitute an illegal “market allocation” on the basis of geography, whereby two competitors agree to split a market between them by location and ordered Glovo to cease liquidation procedures in Egypt and for Delivery Hero to cease and desist from anti-competitive agreements. If the facts are true, it is likely that they would in fact constitute a violation of Egyptian Competition Law on its face, as they could be considered to constitute a deliberate agreement to decrease or rig competition among subsidiaries of the same company in the same market. In that case, no examination of whether this agreement would actually restrict competition would be required, as having fewer competitors necessarily increases the market power concentration of each. Delivery Hero could conceivably be penalized up to EGP 5 million, as might the other shareholders of Glovo, but neither the ECA nor any other body have the authority to force an entity to do business in Egypt. In theory, it would be possible for ECA or a competent court to order Delivery Hero to sell its stake in Glovo in order to restore the market to its previous state, but it is unlikely that such a decision could be enforced due to extraterritoriality. The likely outcome will therefore be that Delivery Hero will reach some form of settlement with ECA.   [1] Egyptian Competition Authority, “The Egyptian Competition Authority Press Release- Following Glovo’s exit from the Egyptian market”, 28 May 2019, available through this link.