Delivery Hero stock hit as it faces larger European fines

Delivery Hero (ETR:DHER) is facing €400 million of fines from the European Commission due to alleged anti-competitive practices.

The German food delivery app firm is alleged to have violated a number of EU competition rules with scrutiny focussed on potential collusion with other firms including exchanges of commercially sensitive information, and ‘no-poach’ agreements over staff.

An EC investigation was launched previously, following unannounced inspections in July 2022 and November 2023.

Delivery Hero had recent ‘informal engagements’ with the European Commission, according to a statement, in which the company was told it would face higher potential financial penalties.

As a result, the company has warned investors that it would ‘significantly increase provisions’ for such penalties in its next financial results – it previously allocated some €186 million in 2023’s accounts for the matter.

“Delivery Hero intends to fully cooperate with the European Commission,” the German company said.

It could delay the company’s goal of achieving positive free cash flow by 2024​​, that’s according to market analysts following the stock.

In the market, the stock was down 6.8% closing at €19.58, after trading as low as €17.35 earlier in the session.